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3. Insurance Companies Acting as Third Party Administrator (TPA’S)

SAMA noticed that there are some insurance companies 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, and insurance companies should comply with this instruction by 1 July 2014 if they do have any agreement in place.