Saudi central bank sets rules for foreign insurers

RIYADH • The Saudi Arabian Monetary Agency (SAMA) ordered foreign insurers working through Saudi agents to halt operations in the country until they get their own licences, reports Bloomberg.
SAMA also put in place new regulations, including mandatory monthly financial performance reports, for licensed foreign insurers operating in the kingdom, according to a statement on the central bank’s website on Mar 15.
Four Saudi insurance companies said earlier this month that they are planning to sell shares to the public to raise 260 million riyals (RM253.53 million). Strict regulation made it harder for Saudi banks and companies to borrow, protecting their balance sheets against the worst of the global credit crunch.
"There are 21 insurance providers already and probably SAMA knows that saturation levels have been reached and limits have to be placed," chief economist at Riyadh-based Saudi British Bank John Sfakianakis said in an email. The country’s central bank governor Mohammad al-Jasser said on Jan 28, that a further tightening of banking restrictions was needed. The financial crisis should stimulate better financial management, al-Jasser said according to the kingdom’s official news service, the Saudi Press Agency.
"There is a need to place important legal parameters on the whole insurance sector, as well as setting limits on new market players," Sfakianakis said, the agency reported.