Many insurance companies will quit the market, and others will merge following the decision of the Saudi Arabian Monetary Agency (SAMA) on new insurance prices, which came into force as of April 1.
A number of experts representing major insurance companies stressed the need to train Saudi cadres and set up an insurance institute to train workers and Saudize jobs in this sector.
They also suggested creation of specialized insurance judiciary bodies to settle disputes as the existing reconciliation committees are inadequate. They called to reduce the number of pending cases.
On the Shariah standpoint on the insurance industry, Musa Al-Ribaian, the former CEO of Cooperative Insurance Company, said that the companies are set up and run according to Shariah principles. He said that this creates confidence among customers making them feel that the insurance firms are subject to governmental control, from the Shariah, financial and administrative points of view.
He said insurance companies are keen to set up Shariah committees so as to provide Shariah views on all forms of insurance.
On laws governing the insurance industry in the Saudi market, Al-Ribaian said these are created to improve the system as a whole, adding that the existing systems and by-laws are not sufficient to streamline the industry.
He said that SAMA is the best supervisory body for insurance activity in the Kingdom.
Badr Al-Shaie of Solidarity Takaful said the insurance market is undergoing a stage similar to the one experienced by banks earlier — community’s resistance. He said the role of marketing people should not be confined to just promoting products but also to spread awareness and remove difficulties affecting the insurance industry.
Khalid Al-Doghaithar of the Saudi-Indian Cooperative Insurance Company said the Saudi society is still reluctant to accept some insurance products. Some community members are still viewing the compulsory insurance as a governmental decision and not a decision aimed to protect the community.
He called for the better utilization of Shariah committees whose opinions are as welcome as those of the community members and, therefore, could positively influence people to benefit from the insurance companies.
Some experts ascribed the development in the insurance industry to the obligatory factor rather than the growth of awareness. Basim Kamil of the Arabian Shield for Cooperative Insurance, who subscribes to this view, said 70 percent of total insurance premiums are focusing on auto and medical insurance policies.
Hamdi Abdulmajeed of Al-Tayyar Insurance Brokerage, asked SAMA to enact laws to protect capital of the insurance companies as these are still weak and need more support from SAMA.
Nasr Abu Abaid of the United Global Company for Brokerage and Reinsurance, said the situation of insurance is much better than the previous periods due to the existence of technical committees.
Sulaiman bin Mayuf of Sanad Insurance said the existing laws need modifications and development.
The experts also dealt with the issue of insurance courts. They stressed that the insurance companies need judicial bodies to deal with certain issues, especially those related to cases of fraud as no charges can be leveled against insurance marketers or customers without reference to courts.
They emphasized that fraudulent acts should be verified by clear-cut judicial bodies affiliated to the company control department at SAMA.
On Saudization of insurance jobs and training, the experts agreed that the major obstacles facing the insurance firms are concerning the Saudization numbers imposed on companies and shortage of trained manpower. They called for the establishment of institutes to train Saudi cadres, and also for the creation of a national project for Saudization of insurance jobs, to be spearheaded by SAMA and other concerned agencies.
Call for insurance institute to train Saudis
