RIYADH, 7 July 2005 — The Company for Cooperative Insurance (NCCI) has launched a new policy to provide coverage in Saudi Arabia against terrorism and sabotage risks.
NCCI Group Marketing Manager Ahmad Al-Shalan made the announcement and said the company had signed an agreement with international re-insurers to launch the policy, described as the first of its kind in the Kingdom.
“The terrorism and sabotage coverage is different from the coverage offered in NCCI’s fire and property policies in the past,” he said, adding that re-insurers had refrained from offering terrorism and sabotage coverage after the Sept. 11 attacks because of claims that reached approximately $70 billion. The technical aspects of the policy are being worked out; details would be released at a later stage.
The official said only a limited number of reinsurance companies offered this type of coverage — usually as additional coverage in fire and property policies. In some cases the additional coverage exceeded the net cost of the policy; this deterred clients from taking policies with terrorism and sabotage cover.
Many projects and properties in the Kingdom are still uninsured against fire and property damage, especially highly hazardous businesses such as gas stations. “Some business-owners do not realize the need for obtaining insurance policies to cover losses that may occur,” the NCCI official said.
A recent study found that only 38 percent of business enterprises in the Kingdom are insured. The study also found that 54 percent of non-insured businesses have no cover due to lack of awareness and 46 percent see it as an avoidable expense or because they have never been exposed to dangers causing losses.
Fire and property insurance make up 17 percent of the SR4 billion Saudi insurance — the third largest portfolio in the insurance business; motor and health insurance policies rank first and second respectively. Al-Shalan commented that this percentage does not match the potential of fire and property insurance in the Saudi market, especially with the current economic, industrial and urban boom in Saudi Arabia.
NCCI recently introduced a new product targeting shop-owners covering the risks of fire, theft, lightning, explosions, earthquakes, floods, pipe bursts and other hazards. The policy also covers lost revenue caused by an occurrence covered by the policy. Other areas of coverage include: Installed glass panes; funds kept in a safe or funds in transit.
