RIYADH — As per the instructions of the Saudi Arabian Monetary Authority (SAMA), automobile insurance companies in the Kingdom are obliged to give customers with no claims against their policies in the past discounts of up to 30 percent when buying new policies or renewing existing ones from April 1.
Motor insurance in mandatory in the Kingdom. SAMA issued the new instructions on Dec. 26, 2016, in a circular, which was posted on SAMA's official website and sent to all local insurance companies.
The amount of discount is to be calculated on the basis of the number of years no claims were made against a policy. The discount could reach 30 percent of the rates in force in case no claims were made for three years. Policyholders without any claims against them in the past year will receive a discount of 10 percent on the base rate.
According to the SAMA instructions, insurance companies may also offer a no-claims discount for individuals holding comprehensive motor insurance. Additionally, insurance companies may provide a further loyalty discount of up to 10 percent to their existing customers. However, this loyalty discount should only be provided upon renewal of a policy with the same company upon its expiry without a gap in the coverage period.
In its circular, SAMA has stated that the issuance of these instructions comes as part of its role to protect policyholders and promote fair competition in the sector to ensure the provision of insurance services at competitive prices.
Basem Odeh, chairman of the Insurance Executive Committee, said the insurance sector was looking forward to applying the new SAMA guidelines, which support the principle of fair pricing and rewarding policyholders who are keen on complying with traffic laws and safe driving.
He expressed his hope that the new mechanism approved by SAMA would raise public awareness about the importance of safe driving.
Adel Al-Issa, official spokesman for insurance companies, said insurance companies would readily follow the SAMA instructions in a timely manner as they were developing automated systems to meet the new pricing requirements. He said the sector had worked closely with SAMA to develop an easy-to-use electronic tool to check the records of insurance applicants.
This tool is ready and the insurer is responsible for accessing the policyholder's record to check whether it is free of claims to help policyholders save time and effort required to obtain certificates, from several companies in some cases, to prove that they have claim-free records, Al-Issa said.
He added that the companies would communicate with the public regularly in coming days to explain any developments in this regard and respond to any inquiries or questions about how they would apply the SAMA guidelines.
The authority has obliged insurance companies to adopt accurate criteria in pricing of insurance policies, Al-Issa said. "This will be positively reflected on the policyholders of no-claim records in particular," he added.
Al-Issa stressed the importance of raising awareness among retail clients about their rights under the new law. He pointed out that in case of non-compliance by any insurance company with SAMA instructions, the client has the right to submit a complaint to the concerned insurance company. In case the company fails to address and solve the issue within a reasonable time frame, the client can approach the consumer protection department in SAMA.
In case of any breach of rights, unfair practices or fraud, clients may exercise their rights under the law by filing complaints to SAMA through any of the channels stated on the authority's website.
"This is to ensure fairness, efficiency and transparency in all transactions for sectors that falls under the supervision of SAMA and to ensure that the related statutory provisions are applied, since it is SAMA's statuary obligation to protect all clients and stakeholders," Al-Issa said. — SG
