In a regulatory move aimed at strengthening the insurance sector in the Kingdom, the Insurance Authority a draft of the licensing requirements for underwriting activities through the “Survey” platform, in order to gather feedback from the public and stakeholders. This step is part of the Authority’s strategy to develop the insurance market in Saudi Arabia , grant companies greater flexibility in risk allocation, support innovation in insurance products, and improve pricing efficiency.
Context of organizational development in the insurance sector
These moves fall within the broader context of the Financial Sector Development Program, a pillar of the Kingdom's Vision 2030. Since its establishment as an independent regulatory body, the Authority has sought to separate the legislative and supervisory roles of the insurance sector from the Saudi Central Bank, aiming to create an attractive and stable investment environment. Regulating underwriting agencies is a vital link that allows insurance companies to delegate certain risk acceptance powers to specialized entities, thereby enhancing the sector's operational efficiency.
Expected economic impact
This regulation is expected to revolutionize the local market by attracting global underwriting firms (MGAs) with sophisticated expertise in pricing complex risks. This will improve pricing accuracy based on broader data and deeper analysis, positively impacting the quality of services provided to beneficiaries, contributing to the localization of specialized insurance knowledge within the Kingdom, and increasing the sector's contribution to non-oil GDP.
Financial and administrative requirements for licensing
The authority explained that obtaining a license requires meeting several strict conditions, most notably:
- Capital: The capital of the company applying for the license must not be less than one million Saudi Riyals.
- Insurance cover: It is necessary to obtain an insurance policy that covers professional liability risks resulting from negligence or dereliction of duty, with a minimum coverage of no less than three million riyals.
- Headquarters: The headquarters and management of the licensed entity must be located within the Kingdom of Saudi Arabia.
The Authority also stressed human competence, stipulating that those holding underwriting positions must have sufficient professional qualifications and practical experience, and that one-third of the board members or managers must hold specialized professional certificates or have extensive experience in underwriting activity.
Application requirements and feasibility studies
The authority indicated that the evaluation of applications depends on the submission of comprehensive documents, including the articles of incorporation, organizational structure, and a complete economic feasibility study. The three-year business plan must include details of the targeted insurance branches, operating costs, funding sources, and projected growth rates, in addition to clear plans for Saudization and the training of Saudi nationals.
Timeframes and guarantees
Regarding the timeframe, the authority clarified that it notifies the applicant of the completion of their application within 30 working days and issues a final decision within 90 working days of the completion date. The regulations also require the applicant to provide an irrevocable bank guarantee equivalent to the required capital, which is automatically renewed until the capital is fully repaid.
The Authority concluded its draft by emphasizing that the role of licensees is limited to accepting the risk on behalf of the insurance company without bearing the financial risk of the company itself, while prohibiting the combination of insurance and reinsurance underwriting activity except with special approval, to ensure that there is no conflict of interest and to protect the rights of the insured.
