Mousa al-Rubaian, managing director of the state-owned National Company for Co-Operative Insurance (NCCI), told MEED in a mid-July interview that a large number of foreign companies are likely to move into the Saudi insurance market after the legislation has been approved.
‘When the law is passed, I think foreign insurance companies will restructure their presence in the kingdom by setting up local companies, rather than working from Bahrain through a local agent,’ Al-Rubaian said. ‘I think most will choose to do so, because with the new laws Saudi Arabia will be by far the biggest market in the Middle East.’
The new law, which is now under discussion by the Majlis al-Shoura (consultative council), is expected to be implemented this year, said Al-Rubaian. It will cover the operating regulations for insurance companies and set up a supervisory body, probably through the Saudi Arabian Monetary Agency (central bank).
NCCI is currently the kingdom’s only licensed provider of insurance services. Local companies also offer unofficial and often unreliable products, while foreign companies offer de facto insurance products dressed up as investment plans. Legislation making health insurance and third-party car insurance mandatory has already been passed, but cannot be fully implemented until the insurance sector is large enough to cope with demand.
‘The most important development in the sector is the passing of this law,’ said Al-Rubaian. ‘The other laws may face difficulty if no other insurance companies are qualified to participate. Under the present system, foreign companies are also often unwilling to become involved because the legal boundaries of their participation are not entirely clear.’