Interview: Raeed Al Tamimi
Do you think the Saudi Arabian Monetary Agency should extend compulsory status to other insurance products so as to support market growth?
RAEED AL TAMIMI: Compulsory insurance is necessary for extending protection to Saudi individuals and corporates and increasing awareness. This way, wealth is protected and the economy flourishes. To achieve these goals, there are some insurance products that can be made mandatory, such as fire insurance for malls and public buildings, as well as professional liability insurance to create or enhance the risk control measures aimed at minimising the number and magnitude of losses. At the same time, we should support the full application of existing mandatory medical and motor insurance. The effective application of existing product lines and the addition of new types of compulsory insurance policies will boost the risk protection industry’s effectiveness for beneficiaries, support the Saudi market and bring insurance penetration and density to international levels.
How have attitudes towards non-compulsory products been changing?
AL TAMIMI: Before insurance was made compulsory, the level of insurance awareness was limited, and therefore demand for non-compulsory insurance products was not at the required level. In the first phase of the compulsory application of medical and motor insurances, a large number of clients looked at insurance policies as simply documents needed to fulfil the regulatory requirements that in turn were needed to obtain government services.
Over time, customers recognised the importance of insurance and took advantage of the benefits, although penetration levels are still low.. This was an important milestone in raising insurance awareness and led to a large number of customers having a genuine desire to upgrade their mandatory programmes and request non-compulsory insurance products with better benefits. Therefore, insurance companies should create and develop types of insurance products that meet clients’ needs, and conduct campaigns to raise awareness of their products and their benefits to individuals or corporations.
To what extent can premiums, and thereby risk, be kept within the Kingdom?
AL TAMIMI: We constantly support the increase of retention ratios within the domestic insurance market. However, we also realise that risk distribution is one of the most important principles of insurance. Of course there are some insurance products for which we retain the majority of premiums and risks, such as motor and health insurance, due to the market’s strong financial capabilities and experience in these areas. At the same time, we distribute the main portion of large risks for other products on a wider geographical scale. The overall retention ratio of insurance companies in the Saudi market increased in 2015. This ratio is largely skewed due to the high retention ratio of motor and health insurance, while the weighted average retention ratio of other insurance lines of business was low. However, the capacity of the insurance market will allow it to achieve a retention ratio higher than the current status, which is our advisable goal in the coming years.
What steps would you like to see taken to reduce the prevalence of fraudulent claims?
AL TAMIMI: Fraud cases are centred largely on medical and motor insurance operations where different parties are involved. We apply advanced IT systems that help us recognise and catch fraud cases. Combating fraud also requires clear regulations to criminalise insurance fraud and the imposition of tough sanctions. It is also important to run extensive campaigns to raise awareness of the negative effects of fraud, which are felt by all the parties involved.
