Rules of Insurance Products Approval
The Saudi Central Bank has issued this Rules according to the Governor’s Decision number (1/442) dated 30/04/1442G, based on the powers vested to SAMA by The Cooperative Insurance Companies Control Law promulgated by Royal Decree No. (M/32) dated 02/06/1424H (corresponding to 31/07/2003), and its Implementing Regulation issued by the Decision of the Minister of Finance No. (1/596) dated 01/03/1425H (corresponding to 20/04/2004).
Introduction
These Rules shall be complied with in conjunction with the Cooperative Insurance Companies Control Law and its Implementing Regulation, in addition to SAMA’s related rules, regulations and instructions.
Definitions
For the purpose of applying the provisions of these Rules, the following terms and phrases, wherever mentioned herein, shall have the meanings assigned thereto, unless the context otherwise requires:
SAMA: the Saudi Central Bank.
Law: Cooperative Insurance Companies Control Law.
Implementing Regulation: The Implementing Regulation of Cooperative Insurance Companies Control Law.
Rules: the Rules of Insurance Products Approval.
Insurance Product: products of general insurance, health insurance and protection and savings insurance, marketed and sold by Insurer to individuals or entities.
Insurer: the insurance company licensed to practice insurance business in accordance with the provisions of the Cooperative Insurance Companies Control Law.
Committee: Products Committee formed internally, consisting of representatives of the Top Management, performing the responsibilities indicated in these Rules.
Individual Product: Insurance Products offered to individual clients and their families.
Corporate Product: Insurance Product offered to entities.
Product ID: the identification number specified by SAMA for each Insurance Product provided by the Insurer.
The Checklist: Forms set by SAMA for Insurance Products requests, indicating documents that the Insurer shall attach when submitting a new product approval request.
Purpose
These Rules aim to set the necessary regulatory procedures and requirements for an Insurer to market and sell Insurance Products to clients, to determine the Insurance Product that require either SAMA’s prior approval or file & use; prior to market and sale, along with enhancing the efficiency of Insurance Product risk management.
Scope
These Rules shall apply to all Insurance Products.
Chapter One Insurance Product Approval Procedures
Insurance Product Filed with SAMA under Prior Approval Procedures
1. Individual Products are subject to SAMA’s prior approval procedures before product marketing and sale.
2. The Insurer must submit an application for approval including all the required documents at least (30) working days ahead of the expected date of marketing and sale of the Individual Product.
3. SAMA will notify the Insurer within (5) working days from the application submission date whether the application is complete or not. In case of incomplete application, SAMA will notify the Insurer of any missing information/documents
4. SAMA will notify the Insurer of any comments within (15) working days from the date of application completion.
5. The Insurer must provide the missing information/documents or address comments (if any) within (15) working days from the date of receiving SAMA notification, this period may be extended for a same period once SAMA has accepted the justifications submitted by the Insurer.
6. In case the Insurer did not provide the missing information/documents or address comments within the period stated in provision (5) above, then the application will be deemed cancel, and the Insurer will have to resubmit the application.
7. The Insurer must not market and sell the Individual Product before obtaining a written approval from SAMA and receiving the Product ID.
Insurance Product Filed with SAMA under File & Use Procedures
Corporate Products are subject to file & use procedures prior to product marketing and sale.
The Insurer shall file the Corporate Product with SAMA prior to its marketing and sale.
SAMA will confirm the receipt of the file, and will provide the Insurer with the Product ID within (5) working days from the date of receiving the file.
The Insurer has the right to market and sell the Corporate Product once the Product ID is received.
SAMA may –when it deemed necessary- direct the Insurer to apply for product approval for the Corporate Product and follow the procedures provided in article (5) hereof.
Required Documents for Prior Approval or File & Use Application
Completed Checklist designed for each type of Insurance Product, along with the required documents as per The Checklist.
Signed certificate from the Product Committee using the form attached in Appendix (A).
A document approved by the Committee clarifying the following:
The objective of the Insurance Product launch and the target clients.
Insurance Product marketing and sale methods.
Retention.
Rationale for not reinsuring with local reinsurers.
Any other supporting documents related to the Insurance Product nature.
The Insurance Product’s policy must include the following components as a minimum:
a- Definitions.
b- Particulars of the Insured.
c- Insurance coverage description and limits.
d- Coverage period.
e- Exclusions.
f- General terms and conditions.
g- Deductible.
h- Insurance premium.
Claim provisions.
j- Cancellation.
k- Surplus distribution method.
l- Jurisdiction.
m- Additional coverage.
n- Identification of the property or risk to be insured.
5. Reinsurance arrangements.
Chapter Two Products Committee
Committee Formation
The Insurer shall form an internal Committee reporting to the Risk
Management committee.
The Committee shall include members from the Insurer’s Top Management, in particular, departments concerned with compliance, underwriting, risk, actuarial work, reinsurance, claims, marketing, and legal affairs, or any other member the Insurer deems fit
SAMA shall be notified with the names of the chairman and members of the Committee within (5) working days of its formation or if any changes occur.
Responsibilities of the Committee
Quality assurance and development of the Insurance Product as well as the assessment of the product performance and risks. The Product Committee shall also ensure that the Insurance Product is compliant with the regulatory requirements.
Review the Insurance Product requiring SAMA’s prior approval or file & use, before submitting the application to SAMA to ensure that it meets all regulatory and consumer protection requirements and that it is technically sound.
Assess the performance of the Insurance Product annually, the feasibility of the sale and marketing of the current InsuranceProduct.TheProduct
Committeeshallalsogiveits
recommendations whether to continue selling, withdraw, or even modify the Insurance Product.
SubmititsreportstotheRisk
Management Committee to assist the Insurer in monitoring risks of its Insurance Product effectively.
Issue the Product Committee Approval Certificate provided in appendix (A) of these Rules.
Ensure that the Insurer has internal systems and controls to manage risks associated with the Insurance Product.
Without prejudice to the obligations of the control functions within the Insurer, theProductCommitteeshallbe
responsible for the governance of the Insurer’s implementation of these Rules.
Chapter Three Product ID
SAMA provides a Product ID for each
Insurance Product offered by the Insurer. The number contains a specified code for the Insurer and the Insurance Product. The Product ID used for the Insurance Product shall also be used for any other coverages added to this Insurance Product.
The Insurer must obtain a Product ID for each of its Insurance Product prior to marketing and sale.
The Insurer may not market and sell the Insurance Product without adding the Product ID issued by SAMA to all product-related documents, including, but not limited to, marketing materials, insurance policy, and insurance policy schedule.
Chapter Four General Provisions
The Insurance Product pricing must be based on sound actuarial calculations and fair prices, and in line with SAMA’s associated instructions.
If SAMA finds out that the Insurance Product provided by the Insurer is not compliant with the objectives of the Law and its Implementing Regulation, SAMA may require the Insurer to make certain amendments, suspend marketing and sale of the Insurance Product to new clients, or terminate the marketing and sale of the Insurance Product, until the Insurer addresses all comments raised by SAMA.
Insurer must comply with provisions and minimum coverages provided in the standard or unified insurance policies issued by SAMA.
The Insurer must keep an updated record of all Insurance Products for SAMA’s supervision and control purposes.
The Insurer must ensure that the Insurance Product is provided with the required level of fair treatment, integrity and financial inclusion, and in accordance with protection principles of insureds and the beneficiaries of the insurance coverage.
Appendix (A) Product Committee Approval Certificate
Insurer’s name Application submission date Insurance Product name Product Class (Individual or corporate) Product type We hereby undertake to: 1) Study the general objective of Insurance Product launch, target clients and the suitability of the product to the market. 2) Ensure full compliance of the Insurance Product with insurance principles and regulatory requirements. 3) Clarify all the details in the insurance policy relevant documents so that the customer can make an informed decision. 4) Study the actuarial and financial projections, accounting impact, market share, impact on solvency margins, and capital and reinsurance arrangements. 5) Study the pros and cons related to the Insurance Product launch, taking into account the interests of insureds. 6) Provide effective systems to support the Insurance Product sale. 7) The Product Committee’s recommendation on the suitability of the Insurance Product to be submitted for SAMA approval. Signature of the Chairman of the Product Committee
Name
Position
Date