JEDDAH, 26 May 2005 — More insurance companies are likely to be licensed to operate in the Kingdom as the Saudi Arabian Monetary Agency (SAMA) urged 26 insurance firms that were previously operating in the country to re-apply after fulfilling the conditions set by authorities.
“SAMA has announced that these 26 firms can present their intent to continue their activities in the Kingdom and complete licensing procedures after fulfilling necessary conditions,” said a SAMA source quoted by Al-Eqtisadiah business daily.
SAMA backed down from its previous decision to close down the 26 firms after the Council of Ministers gave them a three-year grace period to correct their situation. The agency also brought down the number of companies that have withdrawn from the market from four to two: Abu Dhabi National Insurance Co. and Aman Saudi Insurance Co. At present, the National Company for Cooperative Insurance (NCCI) is the only licensed insurance firm in the Kingdom. In March, the Saudi Arabian General Investment Authority (SAGIA) licensed 13 new insurance companies with a total capital of SR2.5 billion to operate in the Kingdom.
According to SAMA, the Kingdom’s insurance regulator, the 13 companies as well as nine others are currently completing licensing procedures. The addition of 26 more would bring the total number of insurance companies in the market to 49.
SAMA has listed 14 companies on its website, saying they have reached advanced stages in their licensing procedures. They are: Assurance Saudi Fransi, Saudi United Cooperative Insurance (AMITY), Saudi Indian Insurance Co., United Cooperative Assurance Co. (UCA), BUPA Arabia, Al-Ahli Takaful Co., Saudi National Insurance Co. SABB Takaful, Arabian Shield Insurance Co., Al-Rajhi Company for Cooperative Insurance, Al-Alamiya Insurance Co., the Mediterranean & Gulf Insurance & Reinsurance Co. (MedGulf), AXA Cooperative Insurance and Tokio Marine & Nichido.
In a previous report, SAMA included Arabian American Insurance Company (AAICO) and American Life Insurance Company (ALICO) among companies that had expressed their desire to withdraw from the market. But the new list does not comprise the two firms, indicating they would continue their operations in the Kingdom.
The 26 companies, which were allowed to re-apply, include Saudi-European Cooperative Insurance Co., SACIR, Arab-German Insurance Co., Islamic Assurance Company, Islamic Insurance Company, Delta and UCI.
The new move comes as part of SAMA’s efforts to regularize the market, which is set to exceed SR15 billion by 2009 as a result of growing demand for medical and car insurance. The market is currently estimated at SR4 billion with car insurance having the largest share of 32 percent, medical insurance 22 percent, property insurance 17 percent and others 29 percent.
According to Ali Abdul Rahman Al-Subaiheen, executive president of NCCI, car insurance will grow to SR5 billion and medical insurance to SR6.3 billion within the next four years. He also predicted that per capita insurance spending could increase to SR750 per year, thus increasing the sector’s contribution to the GDP from less than one percent to five percent.
Meanwhile, the Cooperative Health Insurance Council recently approved five companies to provide health insurance service in the Kingdom. The council also authorized 117 health institutions across the country — 40 in Riyadh, 11 in Jeddah, nine in Dammam, 14 in Madinah, and three each in Makkah and Jubail — to implement the scheme from June 1.
