Freezing bank accounts of unlicensed insurance companies


Edited by Amanullah Bashar
 Apr 04 - 10, 2005



Saudi Arabian Monetary Agency (SAMA) has started freezing the bank accounts of unlicensed insurance companies that are still operating in the Kingdom from abroad.

SAMA, which supervises the Kingdom's insurance sector, took the punitive measure after serving them notice. Regulations were issued months ago instructing all insurance companies to register themselves to obtain a license and to comply with the new insurance law. They were also warned that defaulters would be prosecuted and the companies' operations will be shut down.

SAMA later gave a month's notice to those companies to settle all claims and withdraw from the market. "Any remaining unsettled claims will be paid by SAMA and the agency will take legal action against the companies in their home countries to claim the amounts paid on their behalf," said SAMA officials. According to a report around 17 companies will be affected by the decision.

Financial Transaction House (FTH) Vice President Andrei Ugarov told Arab News that "the government is cracking down on unlicensed insurance companies to regularize the insurance market."

He said "new licenses have been issued to 13 companies recently and more are expected to be licensed soon. A regularized insurance market is good for the customers because it will eliminate companies, which do not have adequate capital to meet claim payments."

Basil M. Al-Ghalayini, CEO of Jeddah-based BMG Financial Advisors, said: "It's a good move by the government for the companies which have not yet submitted their applications as these small insurance companies are not fit and proper to be qualified. They will eventually sell their portfolios and liquidate or merge with other companies. SAMA has already asked these companies to submit their exit strategy."

Earlier, only one insurance company was officially licensed to work in Saudi Arabia i.e. the National Company for Cooperative Insurance which has been operating in the country for a long time and has gained a lion's share of the market.

Early this month SAMA approved the licenses of 13 insurance companies. The minimum capital specified for granting a license is SR100 million.

The Kingdom's new regulations are expected to increase insurance activities as an increasing number of international companies have evinced interest in operating in the Kingdom. Many banks have also expressed interest to start new activities related to insurance.

The new regulations stipulate that all insurance companies must be shareholdings offering at least 25 percent of shares to the public. The size of the insurance market prior to licensing new firms was evaluated at SR5 billion.

The newly licensed firms have injected an additional SR2.5 billion in the market. The Mediterranean & Gulf Insurance & Reinsurance Co. (MedGulf) stands top among the licensees with the highest capital of SR600 million, followed by BUPA Arabia (SR400 million), Al-Alamiya Insurance Co., United Cooperative Assurance Co. and Arabian Shield Insurance Co. (with a capital of SR200 million each).

Other license winners are: Saudi-Indian Insurance Company, Tokio Marine & Nichido, Saudi National Insurance Co., AXA Insurance Company, Saab Takaful Company, Saudi-French Insurance Company, and National Takaful Co. (all with a capital of SR100 million each).

Market analysts are, however, afraid of the dual supervision of insurance firms by the Health Ministry and SAMA which might be instrumental in increasing value of policies. Leading companies have officially protested over ministry's supervisory role.




Sri Lanka is seeking clemency for three of its nationals who have been sentenced to death for carrying out an armed robbery in a private company in the Kingdom two years ago.

In October last year, four Sri Lankans were convicted of armed robbery and subsequently on March 10, High Court Judge Abdul Aziz Al-Musaikri confirmed the verdict pronouncing all four guilty of armed robbery and sentenced D.D. Ranjith de Silva, Victor Corea and Sanath Pushpakumara to death and Sangeeth Kumara to 15 years imprisonment.

It was proved that the accused had committed three robberies, and were caught red-handed while driving a municipal vehicle as municipal employees. The driver of the vehicle, a Bangladeshi, who was working for the municipality through a contracting company, had been shot and injured by the accused.

"We are requesting a pardon on humanitarian grounds," S. Wijesundara, the charge d'affairs at the Sri Lankan Embassy, told Arab News. The embassy has also attached the appeals of the next-of-kin of the convicts, with the plea for clemency.

While in Al-Hair Jail, the four convicts embraced Islam. "We have also received requests from the next-of-kin of the accused to make an appeal through a law firm in the Kingdom. We will be getting the copy of the judgment through the Foreign Ministry here and the mission will be acting on the advice of the law firm to seek legal redress," he said.

Meanwhile, the Asian Human Rights Commission (AHRC) has urged the Sri Lankan government to take urgent action to save the lives of the three Sri Lankans.

Last week, the Jathika Hela Urumaya (JHU), a Buddhist political party which has representation in the legislature, urged the government to intervene immediately to stop the possible execution of the Sri Lankans.

Making a special statement in Parliament, JHU member Athuraliye Rathana Thera said the AHRC had given all the information and the government should act immediately to save the convicted Sri Lankans.