The Saudi Arabian Monetary Authority
(SAMA) announces the issuance of its decision to prohibit the combination of
the practice of insurance brokerage activities and reinsurance brokerage
activities in one company, as of 07/05/1441AH.
SAMA clarified that the
decision came out of its responsibility to develop and consolidate the
stability of the insurance sector and increase its contribution to the growth
of the national economy and diversification of its sources. This comes in an
effort to develop a business environment in support of insurance services,
especially brokerage firms, and to enhance the professional relationship in the
communication processes between them and insurance and reinsurance companies.
SAMA said that it aims through
this step to reduce wrong practices in contractual relations for reinsurance
business, which reflects positively on raising retention rates for local
insurance companies. It also aims to support the development of competencies
and national human cadres in the insurance sector across the Kingdom and to give
them the opportunity and qualification to work in multiple insurance areas,
confirming in this regard the enforcement of the prohibition of combining the
practice of insurance and reinsurance in one company from its date. Companies
combined the practice of the two activities were given a period of one year to
commit to the implementing of
the new decision. To that end, they must provide SAMA with their commitment
plan within three months from the date of the decision.