Saudi Arabia: Govt vehicles to be covered for motor TPL
Source: Middle East Insurance Review | Jan 2017
The Saudi Arabian Monetary Authority has finalised regulations on motor third-party liability insurance covering governmental vehicles, a move forecast to generate billions in premiums for insurers.
Mr Suleiman Bin Mayouf, an insurance expert, expected premiums in the overall insurance industry in the Kingdom to exceed SAR60 billion (US$16 billion) if the regulations are implemented in 2017. The growth rate could rise to 40% if insurance is extended to all government-owned vehicles in the first year of implementation, reported Al Riyadh.
In 2015, the insurance industry reported total premiums of SAR35.6 billion, an increase of 19% over 2014. Growth rate for 2016 is forecast at 20% which could propel total premiums to SAR42.7 billion.
However, Mr Bin Mayouf said that the implementation of the law will face several challenges such as the high cost of insurance given the greater risk associated with the use of these vehicles and the fact that the vehicles are heavily used by public employees and the military. Another challenge would be damage assessment in the event of accidents. The mechanism for claim evaluation and compensation needs to be addressed.
Nonetheless, fierce competition is expected among insurers for a slice of the government vehicle insurance market given the large size of the fleet, including military vehicles. Despite the risk, it is understood that premium rates for insurance cover on government vehicles would be lower than commercial rates because insurers are likely to offer special government contracts.
Under the new regulations, the maximum liability of the insurance company in a single incident (including blood money and compensation for injuries and medical expenses) will not exceed SAR10 million.
SAR10 = US$2.67