The Saudi Arabian Monetary Authority (SAMA) has issued a set of regulations governing bancassurance activities in the kingdom.
This move is part of SAMA's aspirations and efforts to develop the financial services environment and align it with the latest technical developments in the insurance industry around the world.
The regulations, called Rules Governing Bancassurance Activities, aim to expand the scope of distribution and marketing of insurance products through banks and to regulate the relationship between insurance companies and banks.
The rules play a substantial role in raising demand for and awareness of saving products by promoting the distribution of insurance products in remote areas.
The rules spell out various requirements such as:
- The insurer and the bank shall sign an agreement before the bank starts bancassurance activities.
- The insurer and the bank shall obtain SAMA’s prior approval before signing the agreement.
- The agreement must include, at a minimum, the following:
- Terms of the agreement;
- Agreement termination procedures;
- List of the electronic and non-electronic marketing and distribution channels, through which the bancassurance activities will be carried out;
- Training plan for authorised employees;
- Know Your Client (KYC) procedures;
- Compliance procedures;
- Insurance classes and products to be sold via bancassurance activities;
- Marketing and distribution procedures;
- Collection of premiums procedures;
- Bank commission and its basis of calculation, and collection procedures;
- Client care and complaints resolution procedures; and
- Claims handling procedures.