RIYADH, 7 February 2007 — Dozens of unlicensed insurance companies that have entered the Saudi market in previous years have embezzled hundreds of millions of riyals and their owners have fled the country with customers’ money, according to the state-owned National Company for Cooperative Insurance.
“SAMA (Saudi Arabian Monetary Agency) should open its eyes wide open and look out for such companies,” said NCCI Chairman Soliman Al-Humayyed during a press conference. He called for tougher measures against fraudulent insurance scams.
Al-Humayyed said that even though the NCCI was at one point the only insurance company in the Kingdom, “other insurance companies were always there and were operating without license.” He cited examples of many Saudi companies engaging in areas not mentioned in their original business licenses.
NCCI yesterday announced that it was distributing SR500 million in profits to shareholders. “We are the first joint stock company in the Kingdom to distribute 100 percent of its capital to shareholders,” Al-Humayyed said, noting that other companies should follow suit. He said that such a measure “would send a strong message to the Saudi bourse and return confidence to shareholders.”
The net profit of the company has soared to SR461 million in 2006, the largest in NCCI’s 20-year history.
The company also said yesterday that it was now opening doors for people who would want to insure their households, as a first announcement by the company.
He also mentioned that NCCI had signed the largest energy insurance coverage deal in the Kingdom when it signed a deal worth $100 million (SR375 million) with Munich Re to provide it with insurance coverage in the Saudi market.
As per the deal, NCCI will provide the coverage for the oil production industry, the gas industry, the minerals industry, the electricity industry, and other related industries.
The agreement covers construction, energy equipment, pipes and other essential assets of these industries. Energy insurance also provides compensation for expenses, lost production, business interruption, extra expenses, and losses resulting from leaks, pollution, drilling, and other liabilities as well as the construction and maintenance perils.
Al-Humayyed said last year the company paid SR854 million in compensation to 56,000 insured drivers to cover damage costs. He pointed out that the company has made “minor changes” to some of its policies to make them 100 percent Shariah-compliant.
