Insurance companies in Saudi Arabia are required to provide no-claim policyholders with a discount when pricing individual mandatory motor insurance policies as per Saudi Arabian Monetary Authority (Sama) instructions, a statement said.
Such a discount is applied on the base rate, said the statement from the Insurance Executive Committee.
Based on Sama circular issued last December to all local insurance companies and posted at Sama official website, the new instructions are to be applied starting from April 1, it said.
This discount is calculated based on the number of years a policyholder has not made a claim. Further, the discount could go up to 15 per cent to be applied to the rates in force for insurance policies extending to one year with no claim being made, and it increases according to the number of years without a claim, going up to 30 per cent for three years where no claim has been made.
According to the instructions, insurance companies may also offer a no-claims discount for individuals’ comprehensive motor insurance. Additionally, insurance companies may provide a further loyalty discount of up to 10 per cent to their existing customers on the new price for mandatory motor insurance and individuals’ comprehensive motor insurance, the statement said.
However, this loyalty discount should only be provided upon renewal of a motor insurance policy with the same company upon its expiry provided that no gap in coverage exists, it said.
Basem Odeh, chairman of the Insurance Executive Committee, stated that the insurance sector is looking forward to following these important instructions, which support the principle of fair pricing.
Adel Al-Issa, the official spokesperson for insurance companies, said that insurance companies will be ready to follow Sama’s instructions in a timely manner, since they are developing automated systems to meet the new pricing requirements. – TradeArabia News Service
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