NCB and others will form retail presence for insurance policies
The National Company for Co-Operative Insurance (NCCI) is lining up local banks to market motor insurance policies in preparation for the introduction of mandatory insurance on 20 November. It has already signed an agreement with Jeddah-based The National Commercial Bank (NCB) and is in negotiations with three other local banks, according to Mousa al-Rubaian, head of NCCI (Saudi Arabia, MEED Special Report, 20:9:02, page 42).
Announced on 12 November, the agreement with NCB allows NCCI to market motor insurance policies through the bank's branches across the kingdom. The policies will have premiums of between SR 360 ($96) and SR 2,000 ($533), depending on the driver's age and vehicle type. Coverage will extend to SR 5 million ($1.3 million) for
property damage and will be unlimited for bodily injury.
'We want to make it convenient for people all over the kingdom to get these policies, and one way is through banks,' Al-Rubaian told MEED on 13 November. 'We're not equipped to sell to 3 million-5 million customers in the time available by ourselves, so we're in talks with three other banks as well as NCB and will see how we move from there.'
The introduction of mandatory motor insurance is expected to lift the value of
premiums written each year by about
SR 1,600 million ($427 million), according to Al-Rubaian. The law covers insurance for cars crossing the border into the kingdom, which will be introduced comprehensively and immediately, and as a prerequisite for all drivers, which will be introduced over a two-year period.
The strategy of working with banks is unlikely to be employed for the introduction of medical insurance next September. 'Medical insurance is different because it will be done in phases, with only large companies to start with, and won't be as
problematic as the motor insurance,' said
Al-Rubaian. 'There is a different set of distribution channels for corporate customers.'
Another insurance law will be introduced to allow other companies to provide insurance in the kingdom. NCCI is now the monopoly holder. 'We hope by the time the compulsory medical insurance law is implemented there will be other companies eligible to provide insurance,' he said. 'It would be a real burden to be the only one doing it.'
A MEED Subscription...
Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.