Obliging insurance companies to have a committee for product design and risk assessment

The Central Bank of Saudi Arabia “SAMA” obligated insurance companies to create a Products Committee. In order to govern procedures and ensure the quality of insurance product design and development, assess risks, and ensure compliance with statutory requirements. This came within the framework of the controls on the approval of insurance products, in order to meet the needs of the insurance sector, keep abreast of developments, and seek to raise the quality of the insurance product approval mechanism. The bank explained that the controls aim to lay down the necessary regulatory procedures and requirements before marketing or selling insurance products by companies to their customers, and to define the categories of products that either require prior approval or notice of the Central Bank of Saudi Arabia before marketing and selling them, in addition to enhancing the efficiency of risk management. Abdullah Al-Tuwaijri, Director General of Insurance Companies Control at the Central Bank of Saudi Arabia, had expected that next year 2021 would witness an additional number of mergers in the insurance sector. He pointed out that there are disclosures about merger talks of “Care and Trust” companies on one side, and “Solidarity and Al Jazeera Takaful” on the other hand. He referred to the goals of the Kingdom’s Vision 2030 and the Financial Transformation Program, which support facilitating the process of mergers in the insurance sector, and Al-Tuwaijri described the merger for insurance companies as “one of the excellent options”. The insurance sector witnessed a number of positive developments during the third quarter of 2020, as the net income of the sector increased by 1.9%, driven by the increase in the income of insurance operations by 22.5%, while the premiums subscribed reached 8.8 billion riyals, a slight decrease from the same quarter of last year, estimated at 0.4 %. The report also indicated an improvement in the solvency margin of the sector, reaching 178%, in addition to a decrease in the combined rate to 97%, and a decrease in the rate of losses for motor insurance.

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