RIYADH/JEDDAH, 17 November 2002 — The National Company for Cooperative Insurance (NCCI) stated yesterday that its car insurance policies alone will be valid from Nov. 20 (Ramadan 15).
“With automobile insurance becoming mandatory from that day, car insurance policies issued by us will alone be valid for renewal or issuance of new driving license,” a top management executive of NCCI told Arab News in Riyadh yesterday.
The statement came amid confusion among both car owners and insurance companies about the new automobile insurance policy.
Inquiries with insurance companies in Jeddah showed that they were awaiting guidelines from the authorities about the implementation of the new mandate. “We understand that NCCI would hold a meeting on Sunday to clarify matters with regard to the implementation of the insurance policy,” an executive in a leading insurance company said. “We’ve no clear-cut guidelines. Nor do we know whether we will be involved in the process of implementation,” he added.
Motorists were confused about what would happen to their ongoing car insurance plans. Some wondered whether the cooperative group insurance scheme, under which groups of drivers were provided vehicle insurance cover, would remain valid in the light of the new insurance program being implemented by NCCI.
Ali Al-Subaihin, NCCI’s assistant general manager (marketing and sales), said in the capital that the company was awaiting the insurance law that would also allow other companies to enter the market. Presently, NCCI is the only company recognized by the government for issuing motor insurance policies. He said it has given a big boost to the motor insurance market, which has achieved a 20 percent growth rate. The volume of the market is estimated at SR 2 billion. “We issued 40,000 new cases of insurance cover during the last few weeks alone,” he added.
He said that as for those insurance firms that had already provided insurance cover for their clients, their best bet would be to buy liability through NCCI. “In other words, such companies will have to take out a duplicate insurance cover for their clients in order to protect their interests,” he observed.
The charges for the Rukhsa cover range from SR 360 for drivers over 21 years of age to SR 530 for those in the 18-21 age group. The applicant has to submit a photocopy of his ID (if he is a Saudi) or Iqama if he is an expatriate. The coverage is only for third-party liability. The law provides only for third-party insurance not comprehensive insurance.
The NCCI executive said it had already concluded agreements with the National Commercial Bank and Al Rajhi Banking and Investment Corporation, which, between them, have over 600 branches. Plans are under way to issue insurance policies through the Internet, for which negotiations are in progress. NCCI is also selling insurance policies through its own call centers in the Kingdom. Al-Subaihin said the motor vehicle insurance plan has created an awareness among the public about the benefits of insurance. As a result, other insurance products, such as medical, home, business and other categories would also benefit, once they realize the benefits, he added.
The directive makes third party cooperative insurance compulsory for all drivers in the Kingdom as well as those who drive through its territory. The insurance will cover vehicles, property, death and damages to victims of accident in which the insured party is involved. Third party insurance will solve the problem of drivers who are involved in accidents but do not have the means to pay damages. Several studies have revealed that most drivers involved in accidents have been unable to pay damages. These drivers remain in prison until their obligations are met. There are an estimated six million cars in the Kingdom.
