A four-party committee has been established by the Saudi Arabian Monetary Agency, the Jeddah Chamber of Commerce, the Riyadh Chamber, and the Asharqia Chamber to look into the reasons behind the increases in motor insurance premiums over the past two years, reported local media.
The transport committee of the Jeddah Chamber of Commerce commended guidelines set by the Ministry of Transport and the General Department of Traffic which stop insurers from charging an additional premium to cover passengers in third-party cover.
This development followed lobbying by the Jeddah Chamber’s transport committee about the scope of coverage in third-party insurance contracts. The authorities ruled out the additional premium, saying that third-party insurance covers bodily injury to third parties, whether they are in the vehicle or outside it, as well as the material damage caused to other vehicles.
In January, Mr Bandar Al-Jabri, Chairman of the road transport committee of the East Chamber of Commerce, said that the premium for comprehensive auto insurance has risen from 3.5% of the value of the vehicle to 7%, while the average premium for compulsory third-party insurance has increased from SAR1,200 (US$320) to SAR2,500.
Motor third-party liability premiums averaged SAR590 a year in 2014 because of intense competition. They rose to about SAR850 at the beginning of last year, then to SAR950 and SAR1,200 until the beginning of the fourth quarter of 2015, when they settled at between SAR1,400 and SAR1,800.
Meanwhile, according to a member of the insurance committee in the Saudi Council of Chambers, almost half of all companies in the insurance sector need to increase their premiums for health and vehicle insurance this year.
“Like last year, the rates may increase by 100% as the companies incurred incurred huge losses in the fourth quarter of 2015,” Mr Sami Al-Ali was quoted as saying by local media in February.
SAR1 = US$0.26