Riyadh – Mubasher: The Saudi Arabian Monetary Authority (SAMA) plans to implement strict rules on insurance companies in the coming period, aiming to reduce them and make them stronger, Reuters reported, citing informed sources as saying.  

The Saudi insurance companies will be obliged to raise their capital and improve internal risk regulations, the agency added.

After applying these procedures half of the current insurance firms will not be existed, the sources noted.

The current procedures include having at least SAR 100 ($27 million) capital for insurance activities, or $200 million for reinsurance activities, and they are likely to increase.

The Kingdom’s insurance sector suffered due to the economy recession during the current year, as well as health insurance suffered after expatriates left Saudi Arabia, and hospitals’ costs rose.

Most of the insurance companies discussed merger previously, with expectations of growth in firms’ mergers.

These procedures may be implemented due to the difficulty of competition and the accumulative losses of the insurance companies, which led to the decline of capital for about half of the sector companies, analysts told Mubasher.

The companies that may merge are Malath Cooperative Insurance Company with Allied Cooperative Insurance Group (ACIG), and Al Ahlia Cooperative Insurance Company with Gulf Union Cooperative Insurance.