3. Insurance Companies Other than Leading a Medical or Motor Policy
3.1 Acting as Third Party Administrator (TPA’S)
SAMA noticed that there are some insurance companies that manage insurance expenses claims (e.g. medical costs) without taking on the risk. Under this type of arrangement, the risk is not covered/shouldered by the insurance company, but the company administers the insurance claims of the client. This service represents claims administration services, or acting as a TPA, without bearing the insurance risk, which insurance companies are not licensed to do.
Article 3-2 of the Law On Supervision of Cooperative Insurance Companies does not permit insurance companies to carry out any activities other than insurance. Insurance companies are not allowed to provide claims administration services without bearing insurance risk.
3.2 Acting as Co-Insurer Not Leading the Policy
Any insurer participating in a panel of insurers, or following a lead co-insurer must ensure that they obtain full exposure and claims data to underwrite the policy fully. It is not permitted to place full reliance on a lead insurer.