RIYADH, 31 October — The mandatory third-party vehicle insurance law, which was approved by the Cabinet on Monday, will increase the Kingdom’s car insurance market to more than SR2 billion ($533.33 million), a senior industry executive has said.
Suleiman Saad Al-Humaid, chairman of the National Company for Cooperative Insurance, said the decision will double the size of the Kingdom’s insurance market, which amounted to SR3 billion ($800 million) in 1999.
Speaking to Asharq Al-Awsat newspaper, he said the Saudi insurance market was not yet ready to implement the new decision. At present, the NCCI is the only company qualified to provide the service as per the conditions set by the Cabinet.
"I don’t think a single company can do this job alone," he told the daily. "It is essential to make a comprehensive review of the Kingdom’s insurance market, considering the situation."
More than 60 insurance companies are operating in the Kingdom. Humaid said some of these companies could be licensed to provide the service. "There should be a system to regulate these companies ... and monitor their activities," he added.
There is a lot of room for improvement as the present market covers only 25 percent of the vehicles.
There are about four million vehicles in the Kingdom. But the car insurance stands only second in the insurance market, after medical insurance worth SR700.8 million in 1999.
Humaid highlighted the problems and difficulties being faced by his company with automobile workshops, as most of them do not follow quality standards.
"We have made a lot of efforts to sign contracts with reputed workshops. But we had to invest a lot of money to ensure quality service.
He stressed the need for setting up advanced workshops with high technical facilities and good management.
Referring to the high number of car accidents, he said they cost the Kingdom about SR21 billion in damages annually.
"This situation has forced the officials to seek a new mechanism to tackle the problems of accidents with the participation of insurance firms."
Humaid said the new law links the insurance with the driver’s license.
"The insurance will be basically linked to the car. But the insurance of license offers the same coverage, but it is linked to the license irrespective of the vehicle one drives.
"The law is related to liabilities from an accident and does not cover the damages of vehicles involved. This comes under the optional comprehensive insurance coverage which is available in the market," he added.
Brig. Fahd Al-Bishr, director general of the Traffic Department, said his department will consider only the policies issued by the NCCI, until other companies are licensed to provide the cover. He did not say what action will be taken against drivers failing to insure their licenses.
