RIYADH, 24 July — Several private hospitals in the Kingdom have incurred heavy losses as eight international medical insurance companies vanished without clearing bills worth millions of riyals.
The companies were based in Bahrain, Cyprus and Britain. All attempts by the hospitals to reach the companies for payment failed because either they were not accessible or non-existent. Hospitals discovered the dubious nature of the insurance firms when they failed to honor contractual obligations or to make a promise of payment.
According to some leading hospitals in Riyadh, five of the defaulting insurance companies had their headquarters in Bahrain, two in Cyprus and one in Britain. The true nature of these companies has been bared when they failed to respond to verdicts by Saudi courts.
The Riyadh High Court issued orders against two Bahraini firms in a case filed by the Dallah Hospital for claims totaling SR2.8 million. But the hospital’s marketing department was shocked to learn that the companies had no representatives to respond to the court verdicts.
Dr. Abdul Rahman Al-Meshari of the Al-Meshari Hopital in Riyadh talked about his dilemma because of the swindling operations. Despite court orders in his favor against insurance companies based in Cyprus and Britain, he entertains no hope of getting his money back.
“The implementation of the medical insurance law will put an end to this kind of cheating as the regulations stipulate that insurance companies should deposit huge sums with the Saudi Arabian Monetary Agency as guarantees. This will protect the interests of the hospitals as well as the patients,” Al-Meshari said.
Under the new regulations, medical insurance companies approved by the Health Insurance Council alone could operate in the country. In order to obtain the council’s approval, an insurance firm has to produce a bank guarantee for SR25 million, must be reinsured with an international insurance company and it should have the technical and administrative capability to fulfill contractual obligations. The council will also set up a dispute settlement committee to sort out any disputes arising between the parties involved.
Commenting on dubious operations by insurance companies based abroad, Ahmad Shaalan, director of marketing services at the National Company for Cooperative Insurance, said only effective regulations to monitor and supervise the activities of insurance companies could protect the interests of hospitals and patients.
Over 70 percent of the companies and agencies in the sector are operating without proper financial, technical or managerial potentials and they are registered in free trade zones where supervision is virtually non-existent. It will take years to repair the damage done by these companies to the reputation of insurance industry, Al-Shaalan said.
Even courts cannot do anything to help victims of the fraudulent practices in cases where the party concerned exists only in paper, he added.
With a market worth more than SR800 million, the medical insurance sector dominates the insurance industry in the Kingdom. Motor insurance comes next with SR700 million followed by insurance against fire hazards with SR380 million. Freight insurance market stands at SR300 million, engineering insurance at SR215 million and accident insurance at SR150 million.
