| 1. | Law: Law on Supervision of Cooperative Insurance Companies promulgated by Royal Decree No. (M/32) dated 2.6.1424 H, corresponding to 31.7.2003.
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| 2. | Implementing Regulations: Implementing regulations provisions of the Law on Supervision of Cooperative Insurance Companies.
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| 3. | Governor: The Governor of the Saudi Arabian Monetary Authority.
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| 4. | SAMA: The Saudi Arabian Monetary Authority.
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| 5. | Person: A natural person or a juristic entity.
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| 6. | Insurance Supervisor: A government agency or public institution responsible for the supervision and control of the insurance sector.
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| 7. | Insurance: Mechanism of contractually shifting burdens of pure risks by pooling them.
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| 8. | Reinsurance: Transfer of the insured’s risk from the insurer to the reinsurer and to indemnify the insurer by the reinsurer for any payments made to the insured against damages or loss.
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| 9. | Facultative Reinsurance: An optional case-by-case method of reinsurance. The reinsurer has the option to accept or neglect the offered risks.
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| 10. | Treaty Reinsurance: Occurs when the primary insurers cede insurance of certain risks within certain amounts & percentages to the reinsurer and the reinsurer has agreed to accept reinsurance of the assigned risks.
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| 11. | Quota-Share Reinsurance: A proportional type of reinsurance treaty, whereby the insurer is required to cede certain risks within agreed percentages to the reinsurer and the reinsurer has agreed to accept the business.
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| 12. | Excess of Loss Reinsurance: A nonproportional type of reinsurance treaty whereby the insured is required to cede certain risks within specified amounts in excess of the loss amount, which the insurer has agreed to accept. The reinsurer undertakes to accept the insurance on the assigned risks.
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| 13. | Company: A public joint stock company conducting insurance and/or reinsurance activities.
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| 14. | Insurer: An insurance company that accept insurance contracts directly from insured(s).
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| 15. | Reinsurer: an insurance or reinsurance company that accept insurance contracts from another insurer.
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| 16. | Insured: A natural person or juristic entity, which has entered into an insurance contract.
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| 17. | Insurance Policy: Legal document/contract issued to the insured by the insurer setting out the terms of the contract to indemnify the insured for loss and damages covered by the policy against a premium paid by the insured.
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| 18. | Contribution (Premium): Amount offered by the insured to the insurer in exchange for the insurer’s acceptance to indemnify the insured for loss / damages resulting directly from a covered risk.
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| 19. | Beneficiary: A natural person or juristic entity to whom the benefit(s) under the insurance policy is assigned as a result of a covered loss.
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| 20. | Insurance Services: Professional activities related to the insurance and reinsurance sector.
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| 21. | Insurance and Reinsurance Services Provider: A natural person or juristic entity that is licensed to engage in the insurance and reinsurance services or activities, excluding underwriting, permitted in the Saudi Arabia.
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| 22. | Person Providing Insurance and reinsurance Services: A natural person that is licensed to engage in the insurance and reinsurance services or activities permitted in Saudi Arabia who is employed by an insurance services provider.
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| 23. | Insurance Agency: A juristic entity that for compensation represents the Company to solicit, procures and negotiates insurance contracts.
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| 24. | Insurance Brokerage: A juristic entity that for compensation represents insureds or prospective insureds to solicit, procure and negotiate insurance contracts.
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| 25. | Insurance Advisor: A natural person or juristic entity who provides insurance consultative services
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| 26. | Loss Assessor and loss Adjuster: A juristic entity that examines and inspects the insurance risk before it is insured, inspects the damages after they occur to determine the reasons for the loss, assesses the value thereof, and assigns liabilities.
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| 27. | Insurance Claims Settlement Specialist (Third Party Administrator): A juristic entity that investigates and assesses losses, and negotiates settlements on behalf of the insurance company.
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| 28. | Actuary: Person who conduct various statistical and probability theories whereby services are priced; liabilities are assessed and provisions calculated.
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| 29. | Underwriting: The process of evaluating and accepting of insurance risk.
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| 30. | Retention: The amount of risk kept by an insurance company in its own books, in comparison with insurance risks ceded to a reinsurance company.
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| 31. | Solvency Margin: Minimum standard of financial health for an insurance or reinsurance company, where assets exceed liabilities.
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| 32. | Technical Provisions (Reserves): Insurance liabilities, i.e. the value set aside to cover expected losses arising on a book of insurance policies and its financial obligations.
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| 33. | Statutory Reserves: Percentage of profit that a company must set aside as provided under Article (15) of the Law.
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| 34. | Surplus Distribution: Method by which profit of insurance and reinsurance companies is distributed among shareholders and policyholders.
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| 35. | Reciprocal Exchange: Unincorporated association with each insured insuring the other insureds within the association. Each participant in this pool is both an insurer and an insured. An attorney in-fact administers the exchange, to include paying losses, investing premium, recruiting new members, underwriting new and renewal business, receiving premium, and exchanging reinsurance contracts. Members share profits and losses in the same proportion
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| 36. | Self-Insurance: Retention of any risk by structured means, i.e. the company that is retaining the risk has set up a fund against a future event that is fortuitous and outside the control of the company.
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| 37. | Financial Derivatives: A contract whose value is based on the performance of an underlying financial assets, indexes, or other investments.
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| 38. | Risk: Situation involving the chance of loss or no loss, but no chance of gain.
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| 39. | Compliance Officer: A natural person that is concerned with regulatory work to ensure compliance with all rules and regulations.
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