SAMA issued the original Underwriting Circular on 25/5/1435.
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At the request of the Insurance Executive Committee (IEC) SAMA subsequently issued standard claims experience forms for medical and motor insurance on 1 December 2014 to come into effect on 1 January 2015. These forms included clarifications, corrections and updates to the original Underwriting Circular.
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With the issue of this Circular, the Claims Experience Forms remain in force. There are some clarifications to the instructions for quotations which are shown in Appendices Four and Five to this Circular.
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SAMA has noted that underwriting practices in the market remain out of line with international practice in several respects that are damaging the functioning of the market. These practices include:
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| | • | Inadequate loadings being applied to risk premium rates to allow for all expenses, contingencies, profit and the financial condition of the company. |
| | • | Limited rating factors being used to price individual motor and medical risks, with such risks being treated as commodity products |
| | • | For property and engineering insurance, and other largely reinsured risks, insurers acting as intermediaries focussing on volume rather than as risk takers.
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SAMA introduced requirements for insurance companies to obtain and submit actuarial pricing reports for medical expenses and motor businesses late in 2012 and to be implemented starting from 1 January 2013 for medical expenses insurance business and from 1 April 2013 for motor insurance business. These actuarial pricing reports were required to be updated by June 2014 for medical and August 2014 for motor.
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The submitted actuarial medical and motor pricing reports must be updated to fully take into account the recent claims experience of insurance companies.
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The technical instructions for the actuarial pricing reports have now been included within SAMA’s Actuarial Work Regulations, and these Regulations should be read in conjunction with this Circular.
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This Circular details SAMA’s instructions with respect to the above mentioned issues.
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No insurance company shall ever provide a quotation without having adequate underwriting information, including claims experience, on which to scientifically determine the premium rales appropriate for the policy terms & conditions offered. It should be noted that this applies to all insurance policies of all classes.
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