Insurance Supervision Department
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No: ______________________________
| Date: _______________________
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Attachments: _________________
| Date (G): ___________________
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SAMA has noticed alarming market practices in underwriting, especially for medical expenses and motor insurance, which are not in line with international practice, and are damaging the functioning of the market; these practices are:
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| | • | Insurance companies are prepared to quote for schemes without enough claims experience being provided. |
| | • | Premium rates being guaranteed for periods in excess of one year for medical expenses and motor insurance. |
| | • | Insurance companies are managing insurance claims (e.g. medical expenses) 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, and is acting purely as a TPA.
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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. The submitted actuarial medical and motor pricing reports should be updated to fully take into account the recent claims experience of insurance companies.
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This letter (Circular) details SAMA’s instructions with respect to the above mentioned issues.
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