SAMA Governor inaugurates 4th Saudi Insurance Symposium

On Sunday, Dr. Ahmed Abdulkarim Al Kholifey, Governor of the Saudi Arabian Monetary Authority(SAMA), inaugurated the 4th Saudi Insurance Symposium, organized by the Insurance General Committee 30 April - 1 May 2017, with the participation of more than 1100 delegates representing the local, regional and international Insurance Sector.

In his speech, Dr. Al Kholifey highlighted the most important challenge facing the Insurance Sector in the Kingdom; its low contribution to the GDP recording 1.5% in the last year. He also added that there are promising opportunities for the Sector to grow through raising awareness of the importance of insurance, diversifying the services provided, promoting protection and savings insurance, increasing the number of insured vehicles and encouraging mergers and acquisitions in order to establish entities strong enough to face the challenges and achieve higher growth.

Dr. Al Kholifey also drew the attention to the growth witnessed by the Insurance Sector in KSA in its operating results and revenues generated during 2016, Operating profits reached (2,469) million Saudi riyals in 2016, compared to (963) million Saudi riyals in the last year. This indicates an improvement in the insurance portfolio management resulting in the Sector achieving net profits of (2,104) million Saudi riyals in 2016, compared to (810) million Saudi riyals in the last year. Furthermore, gross written premiums in KSA exceeded (36.85) billion Saudi riyals in 2016, which is (360) million Saudi riyals higher than last year.

Dr. Al Kholifey explained that SAMA has issued a number of circulars aiming to provide better insurance services including the need to establish a customer care department and provide discounts for compulsory and comprehensive insurance for individuals with zero violations.

He also added that SAMA has issued a number of circulars and instructions stressing the importance of providing better services to policy holders and beneficiaries alike, protecting their rights and setting a fair price for the services provided. The importance of establishing an independent “Customer Care Department” was also communicated by SAMA to the Insurance Companies in order to establish customer-centric entities following the “customer-first” approach.

He referred to SAMA’s instructions to insurance companies to deposit the amounts of compensation for the claims and the amounts payable in case of cancellation of a policy directly in the bank accounts of the beneficiaries through bank transfer via a fast system, and settle claims of third party vehicle insurance for individuals, which are not exceeding (SAR 2000) within a period not exceeding (5) business days from the date of receiving the claim.

Dr. Al Kholifey stressed on the importance of ensuring fairness of prices of compulsory vehicle insurance for individuals as insurance companies, when pricing compulsory vehicle insurance policies for individuals, offer a discount up to (30%) of the insurance value in addition to another discount for loyalty up to (10%) for compulsory and comprehensive insurance for individuals. SAMA also stressed that insurance companies should consider minimum pricing factors when issuing compulsory vehicle insurance policies in order to differentiate the risk degree between one driver and another, and thus increase the accuracy and fairness of pricing.

He added: “SAMA also paid attention to the provision of compulsory insurance products for transport sector such as trucks, rental vehicles and taxis, as SAMA stressed on the need to refrain from monopolizing provision of these products to a limited number of companies. Insurance companies that offer compulsory vehicle insurance products are hoping to provide it to all holders of valid driver's licenses regardless of the age of the driver”.

Governor of SAMA expressed SAMA’s keenness to enhance the stability and growth of the Insurance Sector, maximize the protection of policyholders and beneficiaries of insurance coverage, and develop the concept of risk management and promote a culture of savings. SAMA launched its insurance strategy under the name of Insurance Vision “2022” through launching more than 38 initiatives including increase of percentage of insured vehicles as reduction of which, in addition to other reasons, has contributed to increase in prices of vehicle insurance during the last three years, through the development of compulsory vehicle insurance mechanism in cooperation with the General Department of Traffic and the relevant government agencies and creation of database for vehicle insurance claims to be shared among insurance companies and Najm for Insurance Services, aiming to improve the risk assessment mechanism.

He pointed out that the Insurance Vision “2022” included initiatives to stimulate the demand for protection and savings products as well as development of human resources by enhancing the insurance skills and knowledge of Saudi workers in the Insurance Sector. Due to the lack of specialized competencies in the actuarial sciences, SAMA, in cooperation and coordination with the Ministry of Education on granting scholarships to a number of Saudi students to study the actuarial sciences within the program of “Your Scholarship is your Profession”. For the sake of such program, SAMA also cooperates with a number of Saudi universities, headed by King Fahd University of Petroleum and Minerals and King Saud University, which provide such specialization to their students within their academic programs.

Dr. Al Kholifey stated that SAMA's strategic objectives for Insurance Sector are in line with Saudi Vision “2030”, where it is hoped that they can create opportunities for the sector to grow and expand. This is led by the expansion of the beneficiaries of the health insurance system in addition to the role of overcrowded facilities insurance in supporting culture and recreation, the role of protection and savings insurance in adopting planning culture by families, the role of credit protection insurance in enabling citizens to obtain adequate housing and the role of government facilities insurance in preserving the State’s movable and immovable properties. Further, insurance generally has a role in diversifying the Kingdom's GDP. Therefore, the optimal utilization of such opportunities requires working on development of operational and technical infrastructure of Insurance Sector, investing in human capital and technical solutions and improving the services provided to customers.

Abdulaziz Al-Sudais, Chairman of the Insurance General Committee, said that “The Symposium’s most important objectives, through which we seek to join efforts and raise the partnership level between the public and private sectors, as well as among the various insurance segments and the beneficiaries of their services, aim to attain the ultimate and main goal of enriching the customer experience and providing best insurance services to customers to meet their needs and aspirations.

In his speech during the opening session, he praised the pioneering role played by SAMA through its recognized and honored efforts to promulgate several laws, instructions and rules that have had a great impact on improving the services provided by insurance and reinsurance companies and self-employed companies. They have also had a positive impact on improving the level of satisfaction of customers and provide them with multiple choices to meet their various needs, as well as social outcomes arising from these legislations, including Saudization of many jobs, providing employment opportunities to the citizens, supporting Saudization ratio in Insurance Sector, investment in human capital and technological transformation.

“With an ambitious national vision, Saudi Vision 2030, we must all, entities and individuals, work hard to achieve the desired results and attain our wise leadership aspirations, pointing out that we must be active partners in the development and change system”, he added.

“The Insurance Sector has witnessed a remarkable increase, as the total gross written premiums reached SAR 36.8 billion in 2016, gross claims paid reached SAR 26 billion and profit growth reached SAR 2.1 billion compared to SAR 810 million in 2015 with an increase of 160%, putting us in front of a real challenge to carry on such success through benefiting from the support given to the Insurance Sector in accordance with SAMA’s Vision 2022. Such Vision establishes and supports the concept of public–private partnership and places an emphasis on the need to enhance the services provided to customers, raising the level of awareness of the importance of insurance in all sectors of society in general and motivating companies to develop their insurance products and provide modern, innovative products to contribute to the GDP”, Al-Sudais stated.

From his part, Basem Odeh, Chairman of the Insurance Executive Committee, stated that: “Despite of its relatively short age, the Insurance Sector in the Kingdom has made significant achievements, which were widely recognized by regional and international experts and specialists. We truly believe that what has been achieved so far is very small compared to the great potentials that can be provided by the positive economic environment stimulated by the Saudi Vision 2030, particularly the support of the non-oil private sector and its contribution to expand our economy, create job opportunities and qualify citizens.”

“The robust Insurance Sector is one of the fundamentals of any successful and advanced economy. We hope that the Insurance Sector in the Kingdom will carry on its march towards success, which was commenced less than a decade ago, thanks to the advanced and comprehensive legislative and regulatory infrastructure provided by SAMA, which is constantly being updated and developed”, he added.

“The Insurance Sector is more aware than ever of SAMA's keenness to give maximum attention to the protection of customers in general and individuals in particular. The Insurance Sector is also fully aware that improvement is so wide in this field, so that it will work hard to improve the service provided to customers and strive to be fair in providing them with access to services and the best possible prices at the highest degree of professionalism, in order to comply with SAMA’s directions and meet its aspirations”, Odeh stated.