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Q)
According to the
Bylaws, insurance Companies will deposit 100 million Cash then they will
invest 90% in investment to schemes supervised by SAMA. Is this
applicable for Capitals of the Insurance Services Providers?
A) According to Articles (59,
60, and 61) of the implementing regulations, investment guidelines shown
in Table (1) are set as a requirement for those companies who don’t have
written investment policy approved by the board of directors and
accepted by SAMA. These articles and table (1) are not applicable to
Insurance Service Providers.
Q)
Can a broker be a shareholder in
an Insurance Company & vice-versa? Does any Insurance Service Provider
have the right to own public shares in Insurance Companies?
A)
Insurance Service Providers can not own public shares in Insurance or
re-insurance company without the approval of SAMA.
Q)
When Should Insurance Agents
apply to SAMA before or after establishing an Insurance Company? As it
is supposed that Insurance Company should approve the agent first prior
to submitting its documents to SAMA.
A)
There is no time frame for submitting applications for insurance and
reinsurance companies or Insurance service providers. Individual agents
could be licensed to practice insurance before the insurance company but
individual agent can not practice insurance activities without being an
employee of a company.
Q)
Article (28-2), Explain the word
“in the Kingdom”. Suggest to exclude this at the first years.
A)
A board member must not be a board member of another domestic or foreign
insurance or reinsurance company.
Q)
When will the law be implemented
on newly established Companies? And what is the period allowed to the
existing Companies to Register?
A)
·
Article (25) of
the Law states that the Law shall come into effect after 90 days from
the date of its publication.
·
The Law was
published on 25/6/1425H, therefore it is already in effect.
·
Existing companies
must submit their applications as soon as possible.
Q)
Can an insurance broker deal
with Insurance Companies in the GCC or abroad.
A)
Yes, subject to Article (26-2) of the implementing regulations which
states that insurance brokers shall offer to place reinsurance business
with local re-insurers before placement with foreign re-insurers.
Q)
Can Capital be used for
operational expenses? (own building as an office).
A)
Capital should be used as a cushion to the solvency of the company.
However, part of the capital can be used to cover some operational
expenses.
Q)
No entity was assigned to settle
disputes and disagreements? Will SAMA play that role or will it remain
the Ministry’s of Commerce responsibility.
A)
According to Articles (20 & 22) of the Law, Insurance Dispute Committee
or Committees and the Grievances Court will be in charge of settlements
of disputes.
Q)
Explain alternative 3: How can
we incorporate in KSA a Bahraini company?
A)
Evaluate the existing portfolio, make up the capital and then establish
a Saudi Joint Stock Company.
Q)
How can we show the historical
numbers in our projections? Can we say in our feasibility study and/or
business plan that the company was already operating in KSA? What do
they do to Old company employees? Can they be transferred to New
company with their indemnities?
A)
·
Feasibility study
must be done by a professional third party such as a financial
consulting firm.
·
Business plan must
be approved by an actuary.
·
Historical numbers
and data relating to existing operation can be used.
·
Old company
employees can be transferred to the new company.
Q) Can
we present the feasibility study and business plan in English or it has
to be in Arabic?
A)
It should be presented in both languages.
Q)
Can individual agents recruited
by insurer be part of requirements to comply with Saudization Plan?
A)
Yes.
Q) Will
investment restrictions apply to the paid-up capital in excess of
Technical Allocations and Statutory Reserves?
A) Yes.
Q) What
is the required qualification/experience of surveyors and adjusters?
A) Article (4-third) highlights
the required qualifications / experience of surveyors and adjusters.
Q) How
long can we keep the Bank Guarantee after paying the SR. 10 Million?
A) The bank guarantee will be
released after the company deposits the required minimum paid-up capital
and before starting operations.
Q) Will
the individual surveyor/adjusters working for a survey/adjusting company
be expected to apply and receive license.
A) Yes.
Q) When
the application for registration of surveyors/adjusters can be
collected?
A) Applications for registration
of surveyors/adjusters can be collected any time.
Q) What
are the documents required for submission with the application of
registration of surveyors/adjusters?
A) The documents required for
submission with the application are available on SAMA's website and in
accordance with Article (4- 2&3).
Q) Time
Table – For acceptance of applications from existing companies? Closing
date after which non license holders must cease trading?
A) There is no time table for
accepting applications.
Q) The
point here is whether SAMA intends that reinsurance will be restricted
to Re-insurers licensed as such by SAMA or approved by them if a foreign
entity.
A) According to Article (42);
1. A
company wishing to engage in reinsurance treaties outside the Kingdom
shall ensure that the following criterions are met:
a) The
foreign re-insurer is licensed and authorized to transact the kinds of
insurance proposed in the Kingdom in its country of domicile.
b) The
insurance supervisor of the foreign re-insurer must authorize the
exchange of relevant information with the Agency.
c) The
foreign re-insurer must maintain separate records and financial
statements of all Saudi operation and be ready to provide the Agency
with any related information upon request.
d) The
company shall provide the Agency with the re-insurer’s financial
statements related to the most recent financial year.
e) The
company must provide the Agency with the latest regulatory or
supervisory report issued by the foreign re-insurer’s supervisory
authority.
2. The
company shall select a re-insurer, at a minimum, with an S&P rating of
BBB, or its equivalent rating from a recognized international rating
organization. If the company wishes to do business with a re-insurer
that is not rated by any international organization or has a rating less
than the minimum requirement mentioned above, the company should obtain
prior written approval of the Agency.
Q)
Article (1-26) – mentions a person who is licensed to engage in
insurance and reinsurance activities. Does this mean one person can do
both?
A) No.
Q)
Article (4-2) – Insurance and reinsurance services provider. Does this
mean you can apply for one license and have one company doing both
activities under one company but you have to keep separate book
recordings?
A) An individual broker can’t be
engaged in both transactions however, the brokerage firm can.Article
(26-3) does not allow an insurance broker to combine insurance and
reinsurance business activities to avoid conflict of interest that is
harmful to the policyholder. Commissions and fees of insurance and
reinsurance business shall be separated.
Q)
Article (7-4) – the licensing fee payable to SAMA is SR 25,000 for both
insurance and reinsurance . Does this mean the company can do both and
does this include that a broker employed by a brokerage firm can do both
activities
A) The brokerage company can do
both activities but the individual licensed broker can not.
Q)
Article (9) – professional liability cover. Why do you have to have two
covers for one activity being a “insurance and reinsurance service
providers?
A) The implementing regulations
require the brokerage company to obtain two indemnity policies when
engaged in insurance and re-insurance business.
Q) Article (42) – reinsurance treaties : It only states A Company
can go outside. Can a broker company be involved in this? What is
the requirement for a Bahraini company that wants to do reinsurance and
treaty business in Saudi? Can a Bahraini registered company do business
in Saudi?
A) A broker can place business
outside the kingdom in accordance with article (26).
Q) Do
the Saudi companies registered in Bahrain have the right to become
shareholder of the new insurance company and up to which percentage.
A) They can as foreign
investors.
Q)
Still we are confused if companies with a 200 million capital can write
facultative inward business or not.
A) An insurance company that is
raises its capital to SR. 200 M. can write facultative inward business.
Q)
Under item 3 they refer to the person who will practice free professions
practitioners must have university degree or 5 year experience, who do
they refer to exactly? The board, the marketing /account executive, or
there is certain criteria such as any person dealing with clients or
insurance market?
A) The implementing regulations
refer to individuals who solicit, market, and conduct loss adjusting and
surveying businesses.
Q)
Article (22) states that if we are licensed to be an insurance broker,
we cannot be an insurance consultant at the same time without prior
permission from SAMA. Because of our work which includes broking and
consultancy appointments, can we apply right from the outset for both
licenses? Will it be combined licenses or two separate licenses? i.e. we
have to apply separately for both licenses.
A) Two separate licenses are
required to avoid a conflict of interest.
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