RIYADH, 21 March 2005 — The Council of Saudi Chambers of Commerce & Industry has sought action against unlicensed insurance companies that have defaulted on claims filed by their customers.
A reliable source told Arab News that the council has tipped off the Riyadh police to take action against these defaulters and recover the dues they owe to their customers. It is understood that some of the unlicensed insurance firms have closed down their operations after receiving money from their customers. The exact value of the claim could not be ascertained, but the amount is said to be substantial.
There were as many as 70 companies operating in the Saudi market before 13 of them, excluding NCCI, were approved by the Saudi Arabian Monetary Agency (SAMA) under the Cooperative Insurance Companies Supervision Act.
The size of the insurance market prior to their licensing was evaluated at SR5 billion. Since then, the newly licensed firms have injected an additional SR2.5 billion in the market, which is set to achieve capitalization at SR30 billion over the next decade.
According to a study conducted by the Traffic Department, there are 42 unlicensed insurance companies in the market, of which five have already stopped their business.
The source said the Traffic Department will no longer accept their Rukhsa insurance certificates should the policy holders be involved in an accident. However, the directorate will accept Rukhsa insurance claims filed by the policy holders of 37 firms for the time being till their final status is determined.
In a related development, Ali Al-Subaihin of the NCCI, told Arab News that SAMA has submitted the list of the 13 approved insurance firms to the Saudi Arabian General Investment Authority (SAGIA) for the issuance of licenses. This will pave the way for their registration by the Ministry of Commerce & Industry. He said another 20 applications from insurance firms are under consideration.
Asked if the Saudi market was large enough to absorb 44 companies, including the NCCI, Al-Subaihin pointed out that it would depend on whether motor vehicle and medical insurance were made mandatory.
“Only then would it be possible for all the players to survive in the market. Otherwise, everybody will have a hard time,” he observed.
The market potential would improve significantly once the government tightens the screw on the application of the law and also extends it to other areas that are not yet covered.
