Saudi Arabia: Saudi Re named exclusive reinsurer for inherent defects coinsurance programme
Source: Middle East Insurance Review | Sep 2020
Saudi Re has signed an exclusive reinsurance contract with Malath Insurance, on behalf of the Saudi insurance industry, to provide reinsurance coverage on the inherent defects coinsurance programme.
With this arrangement, the sole Saudi reinsurer will act as the exclusive reinsurer for the programme for five years, the company said in a statement. Saudi Re will provide reinsurance treaty and facultative protection and expects the contract to reflect positively on its sales and financial performance.
The inherent defects insurance (IDI) is a compulsory cover, mandated by a council of ministers resolution issued in June 2018, requiring all contractors involved in private sector construction projects to obtain an IDI policy. The implementation of the IDI programme will follow a phased approach over a three-year period.
The Saudi Arabian Monetary Authority (SAMA) issued last March a standard policy wording for the IDI specifying a duration of 10 years for the cover. More than 100,000 construction permits were issued in 2019 based on the data of the Ministry of Municipal & Rural Affairs (MOMRA). This new line of business is expected to stir growth in the P&C sector which represents 15% of the overall insurance market premiums in Saudi Arabia.
Saudi Re managing director and CEO Fahad Al-Hesni said, “The IDI is a 10-year-long cover and we have arranged a special retrocession protection as risk management measure to manage this long-tail business.” M