In accordance with SAMA's responsibility to protect the policyholders and encourage fair competition in the insurance sector with the aim of ensuring that better insurance services are provided at competitive prices; taking into account Article (46) of the Implementing Regulations of the Law on Supervision of Cooperative Insurance Companies stipulating that pricing shall be fair, reasonable and adequate through putting in place requirements and measures to achieve stability in the insurance sector; and given that pricing of motor insurance generally does not offer an advantage to the insured with accident-free record, and, thus, those who are less likely to make a motor insurance claim are subsidizing the cost of insurance for those who are more likely to claim;
SAMA issued on 27/03/1438H (26/12/2016) instructions requiring insurance companies to offer a no-claims discount when pricing individual motor insurance policies for the policyholder who has not made a claim, provided that such a discount is applied on the new base rate. This no-claims discount is calculated based on the number of years during which a policyholder has not made a claim. In addition, the no-claims discount can reach 15% of the new motor insurance pricing for one year without making a claim and it increases according to the number of years without a claim, reaching 30% for three years of no claims. According to the instructions, insurance companies may also offer a no-claims discount for individual comprehensive motor insurance.
Insurers may also provide an additional loyalty discount for their customers that can be up to 10% of the new pricing for mandatory motor insurance and individual comprehensive motor insurance as well. However, this loyalty discount should only be provided upon renewal of a motor insurance policy with the same company once it expires and there is no gap in the coverage.
SAMA also required insurance companies to immediately start fulfilling the requirements necessary to implement these instructions no later than 04/07/1438H (01/04/2017).