IMPLEMENTING REGULATIONS OF THE COOPERATIVE INSURANCE COMPANIES CONTROL LAW

Definitions

Article 1

Previous Amendments
  • The following words and phrases, wherever they appear in this Regulation, shall have the meanings set forth opposite each of them unless the context requires otherwise:

      1. Law: Cooperative Insurance Companies Control Law.
      1. Regulation: The Implementing Regulation of the Law.
      1. Governor: The Governor of the Bank.
      1. Bank: Saudi Central Bank.
      1. Person: Any natural or legal person.
      1. Insurance Supervisor: A governmental authority or public institution that supervises and regulates the insurance sector in the country of subscription.
      1. Insurance: The transfer of risk burdens from the insured to the insurer, and compensating those who suffer damage or loss by the insurer.
      1. Reinsurance: The transfer of insured risk burdens from the insurer to the reinsurer, and compensating the insurer by the reinsurer for what is paid to the insured if they suffer damage or loss.
      1. Facultative Reinsurance: Reinsurance under which the insurer offers each insurance risk separately to the reinsurer, and the reinsurer has the option to accept or reject the risks offered.
      1. Treaty Reinsurance: Reinsurance under which the insurer undertakes to cede certain risks within specified amounts or percentages to the reinsurer, and the reinsurer undertakes to accept the reinsurance of the risks ceded to it.
      1. Proportional Reinsurance: Treaty reinsurance under which the insurer undertakes to cede certain risks within agreed percentages to the reinsurer, and the reinsurer undertakes to accept the insurance of the risks ceded to it.
      1. Non-Proportional Reinsurance: Treaty reinsurance under which the insurer undertakes to cede certain risks within specified amounts exceeding the loss amount that the insurer decides to retain, and the reinsurer undertakes to accept the insurance of the risks ceded to it.
      1. Company: A public joint-stock company that practices insurance or reinsurance or both.
      1. Insurer: The insurance company that accepts insurance directly from the insured.
      1. Reinsurer: The insurance and/or reinsurance company that accepts reinsurance from another insurer.
      1. Insured: The natural or legal person who has concluded an insurance policy with the insurer.
      1. Insurance Policy: A contract under which the insurer undertakes to compensate the insured upon occurrence of the damage or loss covered by the policy, in return for the premium paid by the insured.
      1. Premium: The amount paid by the insured to the insurer in consideration of the insurer’s agreement to compensate the insured for the damage or loss caused directly by an insured risk.
      1. Beneficiary: The natural or legal person to whom the benefit specified in the insurance policy accrues upon occurrence of the damage or loss.
      1. Free Professions: Free professions related to insurance and/or reinsurance activity.
      1. Free Professions Holders: Persons licensed to practice any of the free professions related to insurance and/or reinsurance activity.
      1. Practitioners of Free Professions: Natural persons licensed to practice any of the free professions related to insurance and/or reinsurance activity and who work for the holders of free professions.
      1. Insurance Agent: The legal person who, for a fee, represents the company, markets and sells insurance policies, and performs all usual acts on behalf of or for the company.
      1. Insurance Broker: The legal person who, for a fee, negotiates with the company to complete the insurance process for the benefit of the insured.
      1. Insurance Consultant: The person who provides consulting services related to insurance activity.
      1. Surveyor and Loss Adjuster: The legal person who inspects and surveys the insured property before insuring it, and inspects damages after occurrence to determine the causes of loss, estimate its value, and determine liability.
      1. Insurance Claims Settlement Specialist: The legal person who manages, reviews, and settles insurance claims on behalf of the company.
      1. Actuary: The person who applies probability theory and statistics to price services, establish liabilities, and form reserves.
      1. Underwriting: The process of accepting insurance on the risk.
      1. Retention: The amount of risk retained by the company for itself and not reinsured.
      1. Solvency Margin: The extent to which the company’s assets convertible to cash exceed its liabilities.
      1. Technical Provisions (Reserves): Amounts that the company must deduct and allocate to cover its financial obligations.
      1. Statutory Reserves: The percentage required to be deducted from the company’s net profits as stipulated in Article (Fifteen) of the Law.
      1. Surplus Distribution Equation: The method of distributing the surplus of insurance and reinsurance operations between shareholders and the insured.
      1. Mutual Insurance Fund: An insurance method whereby the policyholders affiliated with the fund cover themselves and are collectively and individually responsible for that.
      1. Self-Insurance: Allocating a regular balance to face expected losses from risks desired to be self-insured instead of company services.
      1. Financial Derivatives: A contract whose value is linked to the performance of financial assets, indices, or other investments.
      1. Risk: The event related to the possibility of occurrence or non-occurrence of damage or loss, with the absence of profit possibility.
      1. Regulatory Supervisor: The person responsible for verifying compliance with the application of relevant laws and instructions.
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Objectives of the Law and Regulation

Article Two

Objectives of the Law and its Implementing Regulation:

1. Protection of policyholders and sharholders.

2. Encouraging fair and effective competition.

3. . Enhancing the stability of the insurance market.

4. Enhancing the insurance sector in the Kingdom, and provide training and employment opportunities to Saudi nationals.

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Branches of Insurance

Article Three

Insurance is divided into insurance and reinsurance business activities, and it covers the following insurance classes:

First:General Insurance

  • 1. Accident and liability insurance including the following:

    • a. Personal Accident Insurance

    • b. Work Related Insurance.

    • c.  Employer's Liability Insurance.

    • d. Third Party Liability Insurance.

    • e. General Liability Insurance.

    • f. Product Liability Insurance.

    • g. Medical Liability Insurance.

    • h. Professional Liability Insurance.

    • i. Theft and Burglary Insurance

    • j. Fidelity Insurance.

    • k. Safe Burglary Insurance inside the premises and in transit.

    • l. Any other Liability Insurance.

  • 2.  Motor Insurance: Provides coverage against losses and liability related to motor vehicles, excluding transport insurance.

  • 3. Property Insurance: Provides coverage against fire, theft, explosions, natural phenomena, civil disturbances, and any other insurance included under this class of insurance.

  • 4. Marine Insurance: Provides coverage for goods in transit and the vehicles of transportation on waterways, and any other insurance included under this class of insurance.

  • 5. Aviation Insurance: Provides coverage for airline hulls and liability against passengers and third parties, freight transport by air, and any other insurance included under this class of insurance.

  • 6. Energy Insurance: Provides coverage for oil, petrochemical, other energy installations, and any other insurance included under this class of insurance.

  • 7. Engineering Insurance: Provides coverage for builder’s risks, construction, mechanical, electrical, electronic, and machinery breakdown, and any other insurance included under this class of insurance.

  • 8. Other Classes: includes all recognized classes of general insurance not mentioned above.

Second: Health Insurance

Health insurance provides individual or group coverage for medical costs, medicines, medical and medications requirements as well as management of medical programmes.

Third: Protection and Savings Insurance

1. Protection Insurance: Provides individual or group coverage for death related consequences, and permanent and partial disability.

2. Protection and Savings Insurance: Provides individual or group coverage for death related consequences, and permanent and partial disability with a saving / retirement plan for an additional premium paid by the insured.

3. Other Protection and Savings Insurance: It includes other classes of insurance in the protection and savings insurance not mentioned above

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Conditions for Granting the License

Article Five

SAMA may apply penalties provided under ArƟcle (19) of the insurance law and request application of the penalƟes sƟpulated in ArƟcle (21) of the insurance law in case of submitting incorrect or false information.

Article Six

1. SAMA shall notify the applicant within 30 working days confirming that the application is complete. Whereby, the application is incomplete SAMA shall notify the applicant of any further requirements or missing documents.

2. All incomplete and/or missing documents shall be provided within 30 working days from SAMA’s notification, otherwise the application shall be cancelled and the applicant must re-submit a new application for consideration.

3. SAMA shall notify the applicant within 90 working days from the receipt of a completed application of its approval, or its rejection by providing reasons.

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