Saudi Arabia: SAMA releases model IDI policy
Source: Middle East Insurance Review | May 2020
The Saudi Arabian Monetary Authority (SAMA) has issued the model text for the compulsory inherent defects insurance (IDI) policy.
The regulator requires construction and building contractors working on non-governmental projects to insure hidden defects, with the aim of developing the insurance industry in the kingdom, and boosting the insurance sector’s contribution to the economy, reported Asharq Al Awsat.
SAMA said the provisions set out in the model policy specify the minimum coverage for inherent risk, as well as exceptions.
Parties involved in IDI include the insured, contractors and building owners, local insurers, international reinsurers and firms that provide technical inspection services through the duration of construction, in coordination with the relevant authorities such as the Ministry of Municipal and Rural Affairs, the Saudi Council of Engineers and the Saudi Commission for Contractors.
Engineer Fahad Al-Nassban, chairman of the National Committee of Contractors of the Council of Saudi Chambers, told Asharq Al-Awsat that the number of building projects in the country is large, comprising housing, commercial centres and entertainment centres.
He added that mistakes can occur during construction, both visible and hidden, especially since construction is carried out by several subcontractors, who may fail to implement some requirements accurately, which would mean repercussions for the main contractor. M