JEDDAH: Investors in the transport sector have lambasted insurance firms for raising car premiums by 400 percent, a move they say would force businesses to close.

There was likely to be a surge in the number of people who are not covered, from the current 50 percent of the market, they said at an open meeting of the transport committee of the Riyadh Chamber of Commerce and Industry on Wednesday.

They rejected arguments from the insurance industry justifying the price hikes, and said that these companies made profits in the region of SR735 billion in 2014, according to a report in a local publication.

Experts who attended the meeting said that the price increases not only harmed the sector, but would place an additional burden on consumers in the Kingdom, the report stated.

Members of the committee said insurance companies must ensure they stick to the purpose of their business; and that there should be a review of legislation concerning the industry passed more than 10 years ago.

The committee said insurance companies tend to create new insurance cover every time a vehicle is sold, with an added cost to consumers. There was also insurance provided for people without their knowledge, causing financial and administrative problems, he said.

The committee members said that they had met with representatives of insurance companies to determine the reasons for the price hikes. Although the companies claimed that they were covering accidents caused by people breaking traffic laws, this was not found by the committee to be suitable justification.

The committee found 4,000 fake accidents recorded by the industry. In addition, it appears these companies may have been inflating prices and costs of accidents, and compensation paid out.

Insurance companies were requested to write a letter to the Ministry of Interior seeking a review of laws in terms of providing cover to people involved in breaking the law, because this was encouraging drivers to break the law continuously.

In terms of fake accidents, the Traffic Department and Al-Alm Company announced they were prepared to set up an SMS service to limit such fraud. This system was proposed at a meeting more than two years ago, and would have provided vehicle owners with an SMS in the case of traffic violations.

The meeting included Al-Alm Company, Al-Najm Company, the Saudi Arabian Monetary Agency, and the traffic department. However, the traffic department did not activate the system.

The committee said it had held numerous meeting with SAMA officials regarding the issue, while the deputy governor of the institution was provided with a complete file on the issue last year. However, the situation did not improve and insurance rates remained high. SAMA had reported on the industry’s profits and stated there was no need to raise premiums.

The report revealed that every person spent an average SR991 on insurance. Al-Alm company data indicated an average 6,500 policies were issued a day with regard to ownership transfers, amounting to an average of SR392.9 million a month, or SR33 billion a year.

The committee said the transport sector was one of the most important for the national economy, and any obstacles hindering its growth should be addressed urgently.