Consultation open on Saudi Arabia new insurance laws
Captive insurance executives will be looking closely at the details of a much-anticipated new draft Insurance Law, which has been unveiled by the Insurance Authority (IA) in the Kingdom of Saudi Arabia. The draft law will be open to public consultation until July 22.
As the insurance sector in Saudi Arabia grows and becomes more sophisticated, the law is designed to keep pace and add a number of regulations, rules and guidelines. These would apply to compulsory insurance products but also captives and reinsurers.
The Insurance Authority said the objectives of the law include to achieve stability and growth, encourage investment and strengthen stakeholder confidence. It also wants it to establish contractual principles and protect the rights of policyholders and beneficiaries while supporting innovation and digital transformation.
The Law will replace the Law on Supervision of Cooperative Insurance Companies (2003), and all insurance-related powers and responsibilities set out in the Cooperative Health Insurance Law (1999). It also consolidates and updates a number of other laws and regulations, and repeals all conflicting provisions therein, such as the Cooperative Insurance Companies Control Law (2021); Insurance Corporate Governance Regulations (2015); Outsourcing Regulation (2012); Insurance Intermediaries Regulation (2011); and Regulation of Reinsurance Activities (2010).
Justin Whelan, partner at law firm KSA, said: “The Law is a welcomed piece of legislation in furthering the IA’s objectives and developing the re/insurance sector in Kingdom of Saudi Arabia.
“As re/insurance in the Kingdom sophisticates, additional regulations, rules and guidelines are anticipated regarding, for instance: compulsory insurance products; captives and reinsurers; solvency requirements; data protection; insuretech and digital insurance; regulatory sandboxes for testing innovative solutions; outsourcing; claims handling; and establishing Shariah governance rules and standards.
“It remains to be seen whether further insurance sector legislation will also develop principles such as, for example, uberrimae fidei (the doctrine of utmost good faith) and the policyholders’ duty to make to insurers a fair presentation of the risk, or an insurers’ remedies for policyholder breaches.”
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