JEDDAH, 13 October 2006 — Eighteen insurance companies, some of whose licenses are being processed at the Ministry of Commerce and Industry, are still awaiting Cabinet endorsement. Executives of these companies expect an early endorsement by the Council of Ministers, especially after the licensing of 13 insurance companies in one go by the Cabinet on Monday.
Saad Khabbaz, general manager of Arabia Insurance Cooperative Company, one of the firms licensed by Saudi Arabian General Investment Authority (SAGIA), said he expected that his company would be licensed in the next batch. He said his company had fulfilled all the conditions required by SAMA and the Ministry of Commerce and Industry.
Abdul Ilah Saati, professor of insurance at King Abdul Aziz University and member of the International Insurance Association, said he expected the licensing of the remaining companies within six months. “I think they wanted to do it gradually,” said Saati. “If they license all of these joint stock companies together it would be too much for the economy and the stock market. More over, the files of some companies are not complete.”
Asked when he expected the licensing of the remaining firms, Saati said: “I believe it would be done within six months.” All companies have completed the difficult part of providing SR100 million ($26.6 million) financial guarantee to win the license.
Among the 31 companies that have sought government approval only 13 have so far won licenses. Until now National Company for Cooperative Insurance (NCCI) was the only licensed company in the Kingdom.
According to Saudi Arabian Monetary Agency (SAMA), the Kingdom’s insurance regulator, the licensing process of 11 companies has reached advanced stages while the files of seven others are still under SAMA review.
Saati urged the government to speed up licensing of more insurance companies to meet growing market requirements.
“The licensing of more companies will empower the economy and strengthen the stock market,” he said. “They will also regulate insurance market and improve the quality of service. The most important thing is that the rights of subscribers will be protected as the activities of insurance companies would be monitored and regulated by SAMA.”
According to SAMA website, the licensing process of the following 11 companies have reached advanced stages: Tokio Marine & Nichido, BUPA Arabia, Al-Ahli Takaful, Al-Alamiya Insurance, Al-Rajhi Company for Cooperative Insurance, AXA Cooperative Insurance, United Cooperative Assurance (UCA), Arabian Malaysian Takaful, Trade Union Insurance and Arabia Insurance Cooperative Company.
SAMA said it was still studying the files of seven companies that have applied for license. They are: Kingdom Cooperative Insurance, Arabia Ace Insurance, Takaful Taawuni, ISAR Insurance, Arabian American Insurance Co. (AAICO) and American Life Insurance Co. (ALICO).