Saudi Arabia: Insurance industry lauds move to separate insurance & reinsurance broking ops
Source: Middle East Insurance Review | Feb 2020
The decision by the Saudi Arabian Monetary Authority (SAMA) for the insurance industry to have separate companies for reinsurance and insurance broking operations will lead to more transparency in contractual relations, job opportunities and greater confidence in the local market, said industry professionals.
Mr Salah Al-Jabr, head of the Finance Committee of the Eastern Chamber of Commerce and Industry, believes that the decision will lead to the establishment of specialised reinsurance broking companies in the kingdom, reported Al Arabiya. SAMA grants brokers a one-year period to complete the segregation of the two types of operations.
The head of the National Insurance Committee Mr Abdelaziz Abu Al-Saud added that the decision is not expected to have a material impact on rates or on insurers in the Saudi insurance market.
He further said that SAMA hopes that the move will lead to minimising errant practices in reinsurance business, raising retention rates of local insurers, and reducing reinsurance premium rates because reinsurers are, for the most part, non-Saudi companies that do not operate locally.
Stating that the decision took immediate effect, SAMA said in a statement on 2 January that the goal is to increase the stability of the insurance sector, boost its contribution to national economic growth and reduce “wrong practices” in the industry. M