JEDDAH, 25 October 2005 — The Cooperative Health Insurance Council (CHIC) has given preliminary approval to 14 companies to provide health insurance service in the Kingdom ahead of making health insurance mandatory from January 2006. In the first stage, companies having 500 or more workers will have to provide health cover to their employees.
“This is the beginning of a big change,” said Dr. Abdalelah Saaty, chairman of the insurance council at Jeddah Chamber of Commerce and Industry. “The law has clearly stated the employer pay the health insurance premiums of his employees,” he told Arab News, adding that the CHIC would review implementation of the scheme after six months.
Insurance companies have already started issuing health cards to four groups of clients. The first group, paying a premium of SR2,500, will be covered for a total of SR500,000 annually. The second group will get SR300,000 coverage on a premium of SR2,000 while the third group will get SR100,000 coverage for SR1,000. Owners of the companies will get coverage of up to more than SR1 million for SR5,000 annual premium.
In the first phase, the cooperative health insurance scheme would be implemented on expatriate workers in companies having 500 or more employees. The council has urged these companies to implement the scheme by Jan. 1 or face punishment including fines and recruitment ban.
Article 14 of the Cooperative Health Insurance Law says, “If an employer did not subscribe to the service or did not pay premiums for the employees and their families, he should pay all the unpaid premiums in addition to a fine of not more than the annual premium of his employees. He may also be banned from recruitment either permanently or temporarily.”
The issuance of iqamas (resident permits) will also be linked to insurance as the Passport Department will not issue or renew iqamas from June 2006 if they are not covered by health insurance.
The companies, which have been selected for the service, have already applied for license from the Saudi Arabian Monetary Agency (SAMA), the Kingdom’s insurance regulator. Most of the applications are in advanced stages in the licensing process.
Dr. Saaty expected the Kingdom’s insurance market to triple from SR8 billion to SR24 billion within the next 10 years. At present insurance contributes only 0.7 percent of the gross domestic product (GDP) and Saaty expected it to reach 3.7 percent in five years once the companies are licensed and more businesses are insured.
Saaty has called upon authorities to expedite licensing of new insurance companies to protect the interests of both individuals and businesses. He argued that the formation of a single specialized authority would help speed up the licensing process. About 30 insurance companies have applied for license. The government has allowed foreign insurance companies to open their branches in the Kingdom, Saaty said.