The Saudi Arabian Monetary Authority (SAMA) has suspended a fourth insurer from issuing new motor insurance policies or renewing existing ones due to the latter’s delay in settling motor insurance claims and its handling of customers’ complaints.
In addition, the insurer has to name an external consultant, that should be approved by SAMA and its scope of work should be set by the regulator as well, to assess the company’s processes relating to claim settlements and complaint processing, make recommendations and develop necessary corrective actions, said the regulator in a statement.
The sanctions imposed on United Cooperative Assurance (UCA) took effect from 7 December 2016. The insurer had been similarly suspended at the start of 2016, but the suspension lasted from 21 June to 6 September.
UCA’s latest suspension followed within a week of that imposed on three other insurers for the same non-compliance. These are Allied Cooperative Insurance Group (ACIG), Malath Cooperative Insurance & Reinsurance and Mediterranean and Gulf Cooperative Insurance and Reinsurance. Their suspension took effect from 29 November.
4 suspended insurers account for 45% of motor business
The four companies represent 45% of the motor portfolio in the Kingdom, according to the experts who described SAMA’s decision as an indication of a more active and strict implementation of regulations, which will help improve practices in the insurance market.
The regulator said that their suspension would be lifted when the companies improve their practices and are compliant with the rules that protect the rights of customers and beneficiaries.
To speed up motor claims processing, SAMA will require insurers to adhere to standardised procedures for processing and settling compulsory motor third party insurance claims for individuals starting from the beginning of 2017.
This will include making claim settlements for third parties for amounts not exceeding SAR2,000 (US$533) within five days of the receipt of claims documents. The move was made following a large number of recurrent complaints about delays in settling insurance claims.
SAMA said that a number of insurers have failed to comply with regulatory requirements despite continual follow-up by the regulator. SAMA has said that it would be more rigorous in its efforts to ensure all claims are paid appropriately.
SAR10 = US$2.67