Regulatory And Supervisory Procedures
Article Thirty
SAMA’s examiners or any person assigned by it shall have the right to conduct office and field examinations of all accounts, records, documents, and transactions related to the insurance affairs of the Company and the Insurance and Reinsurance Services Provider, and their employees shall provide all information, particulars, and documents required by the examiners.
Article Thirty-One
The Company and the Insurance and Reinsurance Services Provider shall cooperate fully with SAMA’s examiners, and particularly in the following:
1. Enabling SAMA’s inspectors to have access to the company’s registers, accounts, and other documents in order to carry out their examination;
2. Providing SAMA’s examiners with all available information and clarifications.
3. Revealing to SAMA’s examiners any irregularities or violations in the Company’s activities upon commencing their assignment;
4. The Company and the Insurance and Reinsurance Services Provider’s employees are prohibited from concealing or attempting to conceal any information or irregularities, and not replying to any clarifications sought by the examiners.
5. Carrying out the recommendations and instructions issued to the Company and to the Insurance and Reinsurance Services Provider as a result of the examination.
Article Thirty-Two
The Company and the Insurance and Reinsurance Services Provider shall comply with the working hours specified by SAMA at its head office and branches in the Kingdom.
Article Thirty-Three
The Company shall comply with the minimum and maximum limits as determined by SAMA for each class of insurance as well as insurance contributions and premiums.
Article Thirty-Four
1. The Company’s Board of Directors shall form an audit committee consisting of at least three and no more than five members. from nonexecutive managers and mostly nonmembers of the Board of Directors.
2. The Company shall:
a. Establish an internal audit department, which shall report directly to the audit committee. The officer in charge of this department must be a holder of a professional certificate in this discipline.
b. Establish a regulatory compliance department and appoint a regulatory compliance officer. This office shall verify compliance with all rules, regulations and directives. This office shall be directly affiliated to the audit committee and may contact directly SAMA and provide it with information according to the procedures that it specifies, and report to the internal audit department any indemnity or claim payments which violate the standard technical claim payments.
Article Thirty-Five
No Person shall:
1. Disclose any information obtained in the course of carrying out any work related to the implementation of any provisions of the Law and this Implementing Regulations except for official purposes.
2. Seek or obtain personal benefits by taking any action related to the implementation of the Law and this Implementing Regulations.
Article Thirty-six
The Company and the Insurance Brokerage shall pay the costs of inspection and supervision by paying SAMA the following:
1. The Company shall pay five per thousand (0.5%) of total underwritten premiums in a financial year excluding local market share of the reinsurance business.
2. The Insurance/Reinsurance Brokerage shall pay an amount representing one percent (1%) from the total commissions and fees earned within an accounting year.
Article Thirty-Seven
The Company and the Insurance and Reinsurance Services Provider shall set and implement written internal control procedures, the effectiveness of which 13 shall be valuated by the internal and external auditors shall issue and implement written internal audit procedures.
Article Thirty-Eight
1. The Company shall notify SAMA of the percentage of ownership of any Person who owns five percent (5%) or more of the Company through a quarterly report.
2. Any Person owning five percent (5%) or more of the Company’s shares shall notify SAMA in writing of their percentage ownership and any changes thereof within 5 working days of the date of occurrence of such event.
Article Thirty-Nine
1. SAMA’s written approval is required for any mergers, acquisitions, transfer of ownership, and opening new branches by any Company or Insurance and Reinsurance Services Provider.
2. A written notice to SAMA is required for any mergers and acquisitions between Companies. The written notice to SAMA shall provide the following information:
a. Initial agreement
b. Financial statements.
c. Agreed value:
d. Mode of payment; and
e. Method of valuation.
SAMA may reject the application if it finds that the value or the valuation method is not appropriate or if it deems that, this action is likely to adversely affect policyholders, the insurance sector and the economy in the Kingdom.
Article Forty
The Company shall:
1. Retain at least thirty percent (30%) of its total insurance premium.
2. Reinsure thirty percent (30%) of its total premium in the Kingdom.
3. SAMA’s written approval is required whereby if its difficult for the Company to comply with the above percentages or it wishes to retain a lesser percentage. SAMA may obligate the Company to reinsure or not reinsure part of its direct insurance business transacted in the Kingdom with a domestically or foreign registered reinsurance company in accordance with the insurance market and each Company’s financial position.
Article Forty-One
The Company shall, within one month from the end of each quarter, reconcile policy terms and total coverage issued to the insured with that available from the reinsurer and to take corrective action in case of any differences.
Article Forty-Two
1. A Company wishing to engage in reinsurance treaties outside the Kingdom shall ensure that the following criterions are met:
a. The foreign reinsurer is licensed and authorized to transact the kinds of insurance proposed in the Kingdom in its country of domicile.
b. The insurance supervisor of the foreign reinsurer must authorize the exchange of relevant information with SAMA.
c. The foreign reinsurer must maintain separate records and financial statements of all Saudi operation and be ready to provide SAMA with any related information upon request.
d. The Company shall provide SAMA with the reinsurer’s financial statements related to the most recent financial year.
e. The Company must provide SAMA with the latest regulatory or supervisory report issued by the foreign reinsurer’s supervisory authority.
2. The Company shall select a reinsurer, at a minimum, with an S&P Rating of BBB, or its equivalent rating from a recognized international rating organization. If the Company wishes to do business with a reinsurer that is not rated by any international organization or has a rating less than the minimum requirement mentioned above, the Company should obtain prior written approval of SAMA.
Article Forty Three
The Company shall set up a claims’ department with procedures for accepting policyholder’s claims, claims evaluation and processing. The Company shall maintain records pertaining to policyholder’s claims and classify them into paid, unpaid, and rejected claims. Each record shall include the following:
1. Insurance application and proposal, if available;
2. Copy of the insurance policy;
3. Policyholder’s claim’s information;
4. Adjusters and assessor’s report and any other documents pertaining to the claim and the direct reason leading to the covered loss;
5. Proportional indemnity share of any other insurance and reinsurance policies in effect.
6. Action taken by the Company and the status of the claim.
7. A power-of-attorney from the Insured to the Company to subrogate it in the following cases:
a. Third party Liability for the Loss.
b. Defending the insured in repudiate liability or in determining the indemnity amount.
8. Signed settlement agreement by a Person for a paid claim.
Article Forty-Four
The Company shall settle individual policyholder’s claims in a period not to exceed fifteen (15) days from the date of receiving all requested and necessary documentation related to the claim, another fifteen (15) day period shall be extended with a notification to the regulatory compliance officer with reason(s) of such extension. The Company shall settle commercial entities’ claims in a period not to exceed forty-five (45) days after receipt of all requested and necessary documentation including the report of the loss assessor who must be appointed by the company within one week from the loss notification’s date. If this period is exceeded, the regulatory compliance officer must be notified and provided with reason(s) for such delay.
Article Forty-Five
The Company and the Insurance and Reinsurance Services Provider shall respond to policyholder’s complaints within fifteen days. All complaints shall be entered into a registry that is designated for this purpose. All complaints in the registry must contain all necessary and material information. A semiannual report shall be prepared and forwarded to the Audit committee with all complaints referred or will be referred in the future for litigation purposes.
Article Forty-Six
The Company shall adhere to principles set forth in this article when pricing insurance policies:
1. Pricing shall be fair, reasonable and adequate;
2. Pricing shall be set in accordance with the Company’s underwriting guidelines with adequacy and appropriateness to the risks undertaken by the Company, and in accordance with appropriate technical reserves.
3. Providing SAMA with justifications and basis used in setting prices. These prices shall not be relied upon other Company’s pricing.
Article Forty-Seven
The Company shall evaluate the adequacy of its technical provisions on a quarterly basis. The minimum capital requirement shall be used to cover policyholders’ claims in the case whereby the technical reserves are deficient to meet the Company’s claims obligations. SAMA must be notified if such deficiencies exist.
Article Forty-Eight
The Company’s gross written premium shall not exceed Ten (10) times the paid capital and reserves without SAMA’s written approval.
Article Forty-Nine
No insurance policy shall be issued or renewed to any of the Company’s members of the Board of Directors, Senior and Executive Managers, and their related parties except after the payment of the full premium. Claims submitted for payment on their behalf shall be treated in accordance with procedures and rules set forth by the Company without any exception or preference. The Compliance Officer shall be notified of any related claims payment.
Article Fifty
The Company and the Insurance and Reinsurance Services Provider shall, within forty five (45) days from the end of each year, provide SAMA with the following particulars:
1. Report identifying the names of members of the Board of Directors, managing directors, general mangers, senior managers in all branches and affiliates and foreign representative offices, including the names and current positions and dates of appointment and the number of years of service in the company.
2. Report identifying the percentages of Saudi and non-Saudi employees on the Company, Branch, and departments levels including the managerial positions held by Saudis.
3. Any other particulars requested by SAMA.
Article Fifty-One
The Company shall adhere to minimum coverage issued and/or approved by SAMA for all classes of insurance. The insurance policy must specify all related coverage benefits. The Company must provide the technical and pricing basis for its insurance products. In respect of protection and savings insurance, such technical basis and pricing must be prepared and/or approved by an Actuary.
Article Fifty-two
The Insurance Policy shall be written in a clear way that can be read by the public at large, and shall contain the following:
1. The policy schedule must specify the following as a minimum:
a. Policy number, which must also be provided in all related document to this policy.
b. Policyholder’s name and mailing address.
c. Coverage period.
d. Coverage descriptions and limits.
e. Deductibles and Retentions.
f. Endorsements, Warranties, and Riders.
g. Conditions and Exclusion.
h. Insurance rates and premium amounts, basis of premium calculation and the amount of commission paid under the policy.
i. Identification of the property or activities to be insured.
2. The standard text of the policy shall contain the type of coverages, general terms, conditions, and exclusions.
3. Endorsements and riders shall indicate additional coverages, conditions, and exclusions not mentioned above and which are different from the main agreement.
4. The Company’s signature and seal shall be on the policy and its attachments.
Article Fifty-Three
1. The Company shall, before issuing an insurance policy, give the policyholder access to the terms, conditions and exclusions of the policy.
2. Upon acceptance of the insurance application, the Company shall issue the client a binder/cover note as a temporary insurance document until the policy is issued. The Binder shall reflect all insurance coverages provided by the policy for a period not exceeding thirty (30) days from the commencement of coverage.
3. An insurance policy shall be amended by virtue of a written request submitted by the policyholder followed by an addendum issued by the Company.
Article Fifty-Four
1. The Company shall not cancel a valid insurance policy except for conditions stated in the policy cancellation clause. In case of a cancellation of the policy, the company shall refund the premium on a pro-rata basis. The company shall afford the policyholder a minimum period of thirty days (30) before the effective date of cancellation by the company.
2. The policyholder may cancel the insurance policy and recover part of the paid premium, on a short rate basis, provided there are no unpaid or outstanding claims.
Article Fifty-Five
The basis of the information provided in the policy shall be the application submitted by the policyholder. When completing the insurance application, the following must be taken into consideration:
1. Insurable interest.
2. Providing all material facts related to the insurance policy.
3. Indemnification of the policyholder based on the insurance policy shall be the purpose of the insurance and/or reinsurance policy.
4. Insurance provided must not violate any rules, regulations, and directives.
Article Fifty-Six
The Company shall provide credible reasons for denying, canceling, and non-renewing insurance policies without discrimination and unfair treatment between policyholders, and shall not rely on decisions of other companies for its actions.
Article Fifty-Seven
The Company shall notify SAMA of all insurance related benefits and incentives schemes provided to its employees.