RIYADH, 25 October — The Traffic Department has stopped accepting third party insurance policies recently issued by a private insurance company, breaking with the department’s practice over the past two months.
The general administration for traffic had earlier agreed with Al-Mashriq Company, the agent of the Saudi American Company for Cooperative Insurance and Reinsurance, to accept its policies for the issuance of driving license on certain conditions.
However, after two months the traffic officials changed their stand and began turning down the policies issued by the company. The traffic officials explained that they were acting on the orders of the director of public security based on a directive from the assistant interior minister for security matters, which specified that the National Company for Cooperative Insurance was the only competent authority to issue insurance coverage for drivers.
The directive also said regulations governing the operation of private companies in this sector would be published soon after necessary studies. The NCCI policies have been acceptable for the past five years.
Hassan Kawo, director-general of the Al-Mashriq Company, said his company issued more than 2,000 policies for driving license applicants during the last two months and the traffic department had not raised any objections.
He feared that the latest development is damaging to the good reputation of the company and several employees will have to be laid off.
The company has appealed the authorities to honor the policies already issued by it until the end of their one-year validity period, he added. The officials have agreed orally to consider the request, he said.
The sources in the insurance sector believed that the accident cover provided by private insurance companies should be approved because the compensations for injuries and accident deaths were very huge.
Legal sources believe that the absence of comprehensive regulations in the insurance sector might lead to poor performance by the agencies of foreign-registered companies operating in the Kingdom. In the absence of required regulations, the government cannot approve their insurance policies, they said.
