RIYADH: In an effort to preempt the potential occurrence of fraud in the Kingdom’s insurance sector, the Saudi Arabian Monetary Agency (SAMA) plans to introduce a new set of regulations, Al-Eqtisadiah daily reported yesterday.
The new statutes, which are to be implemented early next month, will be mandatory on all insurance and reinsurance companies, including the branches of foreign firms and insurance middlemen.
The regulations stipulate insurance companies pass on information about fraud to concerned authorities and SAMA. Companies are also required to lay down emergency plans to counter fraudsters.
“Insurance companies should have a separate department to execute emergency plans to counter fraudulent practices and should, if required, consult experts such as auditors or IT experts as the case may be,” the statement added.
SAMA classifies common fraudulent practices into three categories: Internal fraud in a company’s activities involving the company’s board members or employees; fraud committed by insurance middlemen or agents against their clients or companies; and fraud practiced by clients or third parties.
Companies are also advised to adopt clear strategies to combat fraud and are asked to prepare special action plans for internal monitoring to detect any unethical practices by employees. They are also required to update their plans and strategies to suit changing environments with the approval of their boards of directors.
Insurance firms or middleman refusing to implement the new statutes will be deemed as violating the Kingdom’s regulations of cooperative insurance laws and would be liable to penal action.
