The retention ratio in Saudi Arabia progressed to 83.6% in 2016, reflecting less reliance on reinsurance market while the claims ratio slumped to 73.6%, according to experts at law firm HFW.
In a market briefing organised by the DIFC Insurance Association, the experts examined the role of the regulators in the Saudi market, including the Saudi Arabian Monetary Authority (SAMA), in developing the insurance market, as well as practical issues in relation to capital requirements and placement of risks.
Dr Bassel Hindawi, Chairman/CEO of DIFC Insurance Association, said the workshop is held at a time when the Saudi insurance market is going through sweeping regulatory changes and claims handling issues.
An insight into claims handling was provided, including timing requirements for handling claims, the extent to which it is possible to contract out of local laws, and the effectiveness of various dispute resolution mechanisms, in particular the role of the Insurance Disputes Committee, a dedicated body formed for the consideration and resolution of insurance matters.
An update on the regulations said the implementing regulations restrict a Saudi company to ceding only 40% of its total premiums to a non-Saudi reinsurer by requiring Saudi insurers to retain at least 30% of its total insurance premium, and reinsure 30% of its total premium in Saudi Arabia. SAMA’s approval will be required in the event an insured seeks a greater cession to a non-Saudi reinsurer.
Updating the legal framework on brokers, Mr John Barlow, Partner of HFW, said there is no legal requirement under the Insurance Law to conduct insurance/reinsurance business through an insurance broker. All insurance brokers/agents in Saudi Arabia must be authorised and licensed by SAMA. The law does not distinguish between placing brokers and producing brokers.
The participants were informed that SAMA has established a new Cyber Security Framework designed to enable the regulated members to better identify and address risks related to cyber security. The implementation of the framework will be subject to periodic self-assessment by the insurer or reinsurer. M