Insurance in the Kingdom of Saudi Arabia shall be provided by insurance companies registered in the Kingdom operating in accordance with the practice of cooperative insurance in line with the provisions of the Articles of Incorporation of the National Company for Cooperative Insurance issued by Royal Decree No (M/5) dated 17/ 4 /1405H, and not inconsistent with the provisions of Shari’ah

• Subject to the provisions of the Cooperative Health Insurance Law issued by Royal Decree No. (M/10) dated 1420/5/1 AH, the Saudi Central Bank (SAMA) shall have the following jurisdiction:

  • 1- Receiving and studying applications for the establishment of insurance companies, cooperative reinsurance companies, and companies practicing insurance support services; to ensure that these applications meet the licensing regulations set by the Saudi Central Bank, and issuing preliminary approval in preparation for referring them to the competent authority to complete the establishment procedures.

  • 2- Issuing licenses, supervising, monitoring, and regulating the operations of insurance companies, reinsurance companies, and insurance support service practitioners, exercising its powers pursuant to the provisions of this Law and its Executive Regulations, and in particular having the following:

    • A- Organizing and approving the rules for investing the funds of insurance and reinsurance operations, and setting the formula for distributing the surplus of insurance and reinsurance operations between shareholders and insured parties after taking into account the existence of separate accounts for shareholders, insured parties, and insurance operations.
    • B- Determining the amount of funds required to be deposited with a local bank to practice each type of different insurance.
    • C- Approving the formats of insurance and reinsurance policy templates and setting the minimum amounts for insurance coverage of liabilities towards third parties, taking into account the provisions of the applicable laws in this regard.
    • D- Setting the rules and regulations that determine how the assets of insurance and reinsurance companies are to be invested.
    • E- Establishing the general rules for determining the assets that each company must retain inside and outside the Kingdom, specifying the minimum and maximum limits for each branch of insurance, and the conditions to be observed in each branch, as well as determining the minimum and maximum limits for premiums and insurance installments in relation to the company’s capital and reserves.
    • F- Setting the rules and regulations that guarantee the rights of beneficiaries and ensuring the ability of insurance companies to fulfill claims and obligations.

  • 3- Collecting fees for licenses and services provided, with the fee amount determined by a decision of the Governor.

• 1. No person in the Kingdom shall practice insurance, reinsurance, or provide insurance support services except after obtaining a license from the Saudi Central Bank (SAMA).
• 2. Subject to the provisions of paragraph (1) of this article, the following conditions shall apply to an insurance company and a reinsurance company:
  • A- The company must be a joint-stock company.
  • B- Its primary purpose must be to engage in any of the insurance or reinsurance activities, and the company shall not engage in other purposes unless they are necessary or complementary.
• 3. An insurance company and a reinsurance company shall not apply to offer any of their shares for public subscription except after obtaining the approval of the Saudi Central Bank (SAMA), which shall set the controls for this approval.
• 4. An insurance company shall not directly own insurance brokerage companies or institutions, and a reinsurance company shall not own reinsurance brokerage companies or institutions.
• 5. The capital of any insurance company or reinsurance company shall not be amended except with the approval of the Saudi Central Bank (SAMA) and in accordance with the provisions of the Companies Law. The Implementing Regulation shall determine the minimum paid-up capital for an insurance company or reinsurance company, which shall not be less than three hundred million Saudi Riyals.

The implementing regulation shall specify the insurance operations governed by this Law, and each insurance company shall specify the classes of insurance it shall provide.

• No insurance companies or reinsurance companies - after commencing their operations - may cease practicing insurance activities before obtaining the approval of the Saudi Central Bank (SAMA), in order to verify that the insurance companies have made the necessary arrangements to preserve the rights of the insured and investors.

• The approval of the Saudi Central Bank (SAMA) is required for the nomination of members of the boards of directors of insurance companies, reinsurance companies, insurance support service companies, members of audit committees and committees emanating from these boards, directors of those companies, and senior positions as determined by the Saudi Central Bank (SAMA). The Saudi Central Bank (SAMA) shall establish the regulations related to their appointment.

The chairman of the board of directors of an insurance or re-insurance company, managing director, a member of the board of directors and general manager shall be liable, each within the limits of his authority, for the company’s violation of any of the provisions of this Law or its implementing regulation.

The Saudi Central Bank has the right to conduct an inspection of the records and accounts of any insurance or reinsurance company, either by its employees or by auditors appointed by the institution. The inspection shall take place at the premises of the insurance or reinsurance company, and in this case, the company's employees must provide what they have in their possession or under their authority, or what is requested from them in terms of records, data, and documents, and must provide any information they have related to the company to the institution's employees or the auditors appointed by them.

Insurance companies and reinsurance companies are not permitted to open any branches or offices domestically or internationally, or to agree to merge, or to own any insurance or banking activities, or to control them, or to own shares in another insurance or reinsurance company except with written approval from the Saudi Central Bank.

1. The general assembly of the insurance or reinsurance company shall annually appoint two auditing offices from among the certified accountants licensed to practice the profession in the Kingdom and shall determine their fees.
2. The auditors shall include in their annual report presented to the general assembly– in addition to the data provided for in the Companies Law– their opinion as to whether the financial statements of the company correctly reflect its true financial position on the date of the balance sheet and the results of its activities during the fiscal year which expires on that date, and as to whether the preparation, presentation and audit of these statements conform to the generally accepted accounting principles applied in the Kingdom.
3. Financial statements and the auditors’ report shall be published within three months from the date of the end of the company’s fiscal year.