Insurers in Saudi Arabia have been preparing themselves to provide cover for hajj pilgrimage post-pandemic. Middle East Insurance Review spoke with Tawuniya’s Mr Mohammad Alsaeed for insights.
With travel restrictions lifted, hajj pilgrimage has resumed at full capacity in Saudi Arabia. The country was expecting over 2m pilgrims – possibly the largest hajj pilgrimage in history. The launch of a comprehensive joint insurance pool allocated for hajj and umrah is part of Saudi Arabia’s Vision 2030 with the goal of enhancing pilgrims’ experience. All local insurance companies are participating in the programme under the direction of Tawuniya.
The insurance programme was launched at the start of 2020 after rigorous studies. Middle East Insurance Review spoke with Tawuniya to share an update of how the programme has developed since the resumption of travel.
The umrah insurance component of the project was implemented first and had been covering millions of pilgrims since the programme’s launch with both medical coverage (emergency cases of various conditions) and general accident coverage (flight disruption, disability, death and body repatriation compensations cases) with up to SAR100,000 ($26,675) cover per pilgrim. Besides these main covers, the assistance cover of COVID-19-related conditions was included with up to SAR650,000.
“Hajj was cancelled due to the pandemic in the first two years of the insurance project, which led to postponing the launch of hajj insurance operations. Meanwhile, the fluctuating suspension of umrah has given a clear visualisation on how hajj season will be once it is resumed for foreign pilgrims. With the experience gained from umrah suspension and resumption and the success of running the project during that pandemic, hajj insurance preparations started very early before the announcement of its resumption,” said Tawuniya health operations senior executive director Mohammad Alsaeed speaking to Middle East Insurance Review.
Saudi Arabia had announced a decrease in insurance premiums for hajj and umrah pilgrims this year. Mr Alsaeed believes it will have little impact on the company’s operations and capacity to provide cover.
“From a statistical perspective and based on a three-year experience, the financial impact in this situation has an insignificant and negligible effect on our operations and provided services towards pilgrims,” he said.
Pilgrimage risks
Risks associated with hajj are similar to other events with overcrowding in a confined area. He said risk plans have to be set prior to such gatherings. Frequent risks include vehicle accidents and stampedes.
“Even though the Saudi government has applied precautionary procedures to prevent these events, there is always a possibility for occurrence. This requires setting risk plans to guarantee maximum control of such situations if, God forbid, they occur. With well-set contingency plans and prepared operational and managerial staffs, all risks would have the least expected impact on insurers since these plans consider all potential risks proactively. These incidents highlight the possible risks categories insurers can be exposed to during this season whether financially, operationally or regulatory,” he said.
“From a financial and revenue-expenses perspective, this project is aiming to fulfil the objective of providing pilgrims with high-value services … the main focus would not be on financial revenues only. Hence, this project is unique compared to other insurance projects and products.
“However, with well-constructed underwriting policies and decisions, regular actuarial revision and outputs, possible expenses and losses can be avoided by preserving an acceptable loss ratio. Operational efficiency is a high priority to our project … our operational parties are prepared to handle all types of operations with contingency operational plans in case of catastrophes and unexpected risks along with highly predicted incidents. During hajj season the rate of calls received by the call centres is expected to increase,” he said.
Pilgrimage claims
With nearly 2m pilgrims simultaneously converging in the same place, the probability of incidents is high. He said flights disruptions were the most frequent, followed by COVID-19 related claims such as medical treatment and quarantine. This is based on previous experience during crowded umrah seasons.
Other expected claims include body repatriation of pilgrims to their home countries in case of death due to natural causes or accidents. Claims related to accidental death compensations for pilgrims who passed away due to accidents during their stay in Saudi Arabia were expected as well. M