General Insurance Information 1What is the role of the Insurance Supervision Department of SAMA?

The Law On Supervision of Cooperative Insurance Companies, promulgated by Royal Decree (M/32) dated 02/06/1424H, has entrusted SAMA with the regulation and supe rvision of the insurance market in Saudi Arabia. To achieve this task, SAMA has setup a dedicated department, the Insurance Supervision Department. 2Where can information about the insurance sector be found? The main source of information about the insurance market in Saudi Arabia is SAM A. As such, all information available about insurance in the Kingdom can be foun d on SAMAs website, specifically, under the Publications section. 3What is the purpose of cooperative insurance? The purpose of cooperative insurance is securing protection for subscribers agai nst future and unexpected losses, and restoring the financial status of the insu red to the state he/she had been in before the occurrence of the loss. This is a ccomplished through mutual cooperation among insured persons. 4What is meant by insurable interest? Insurable Interest is the legal right of a natural or juristic person to insure an object (e.g., a car). In order to insure an object there should be a verifiabl e legal relationship between the person and the subject of insurance. An example of legal relationship is ownership, e.g., if you own a house or a car, you have t he right to insure it, whereas a person may not insure his neighbors house, due t o the absence of an insurance interest. 5What is meant by deductible? Deductible refers to the portion to be paid (specified in the insurance contract) by the beneficiary (the insured) in case a policy-covered risk took place. For e xample, a car accident costing SR 5,000 for repairs, and the deductible as per t he policy is SR 1,000, the company shall pay SR 4,000 and the insured shall bear SR 1,000. 6What is meant by the insurance coverage limits? Insurance coverage limits is the maximum limit of the insurance companys liability as specified in the insurance contract before applying any deductions/charges. F or instance, the maximum limit of the insurance companys liability as specified i n the motor insurance policy is five million Saudi riyals for material damages a nd five million Saudi riyals for physical losses, and any amounts beyond that sh all be borne by the insured, not the company. Motor Insurance 7What is the compulsory motor insurance policy? Compulsory insurance policy covers the damages caused to individuals and propert y by your vehicle. This policy does not cover the damages afflicting you or your vehicle when driving. For example, when an accident takes place and you are 100 % the cause, the insurance company will pay for all the damages made by you, but will not pay you any compensation for damages afflicting you or your vehicle. 8What is the comprehensive motor insurance policy? Comprehensive insurance policies covers both the insurance companys liability for the insureds car (covers the vehicle against fire, theft, and incidental acciden ts) and the insureds liability towards a third party (property and individuals). For example, when two vehicles have an accident, the comprehensive insurance pol icy covers all damages caused by or afflicted on you. The company shall pay all the costs for repairing your car, repairing and compensating all the damages of the third party that you caused and are responsible for. The comprehensive motor insurance program can be expanded for an additional prem

ium where it covers the following: Renting an alternative vehicle for the insured while the damaged one is being r epaired Roadside assistance service Repairing broken-down vehicle at the dealer or a local garage 9What are the things that you should pay attention to when purchasing a c omprehensive motor insurance policy? Limits of Coverage: The amount of coverage stated in the policy or the vehicles market value at the t ime of the accident, whichever is lower, represents the insurance companys maximu m liability for compensation. Make sure that you report the actual value of your vehicle to the company when insuring it, and at each renewal of insurance polic y without addition or diminution because the insurance policy is a compensation policy not an enrichment one. Percentage of Depreciation: The idea of depreciation applied to the object subject of insurance refers basic ally to the principle of compensation which aims at restoring the insured to his same financial position prior to the loss occurrence. This method is used widel y by insurance companies as a means to compensate for the actual value of the da mage resulting from the covered loss, taking into consideration the presumed lif ecycle of depreciated spare parts. Example: if a car had an accident causing it to be totally wrecked after six months of insurance, and it was worth SR 100,000 upon the purchase of the insurance policy, the insurance company will not indem nify the insured for the whole amount, but it shall deduct the amount of depreci ation of the car for six months. No Claims Discount (NCD): Some insurance companies offer the insured (vehicle owner) what is called no clai m discount by which they reduce the insurance premium for next year due to having a claim-free and accident-free record over the previous insurance year. This is to encourage drivers to avoid traffic accidents. On the other hand, some compan ies raise the insurance premium for the new insurance year if the insured submit ted a claim during the previous year. 10- What are the documents supporting the claim in motor insurance? All documents proving and supporting the fact that the person insured was drivin g the vehicle driver when the accident occurred, the insurance coverage validity and the circumstances of the incidence from which the claim resulted. Supportin g documents also include the accident report from the traffic police department and any other original documents the company might require, such as: Driving license Vehicle registration card Insurance policy 11- What are the exceptions of an insurance policy? It is necessary to be aware of the cases where the insurance company is not resp onsible for indemnifying you for the damage that might be incurred by your car d ue to an accident. They are included in the policy under Exceptions or Exceptions f rom the coverage limits or General exceptions. Example: Catastrophe risks Risks resulting from driving a car by a person under the age of 21 Property Insurance 12- What are the types of property that can be insured?

Insurable property can be divided into three categories: Buildings: Refers to the structure of the building and its attachments Machinery and other content: Refers to all content that might be inside the bui ldings or storehouses except for stock Stock: Refers to all items in the custody of the insured whether he owns them o r not and the items and goods kept by an organization whether it owns them or no t 13- What are the insurance coverage limits of property insurance? Property insurance coverage includes: The subject of insurance itself whether it is real estate or a movable asset ag ainst risks (e.g., fire, theft, pipe crack, natural hazards) Contents of the subject insured Personal liability Legal liability against death cases caused by incidental accidents to property and casualties Rent loss for the landlord due to the real estates unsuitability for rent becaus e of a defect or risk covered by insurance according to the insurance policy The cost of an alternative accommodation while the damaged real estate is being fixed 14- What risks are excluded from property insurance? Property insurance exclusions are: Damages resulting from riots and domestic strikes and disturbance provided that it was not agreed on adding them in the insurance policy Damages ensuing from wars whether declared or undeclared Damages of radioactive contamination whether it is the direct cause or not. Injuries or destruction because of pollution All types of consequential losses Terrorism risks Damages ensuing from maritime risks if their exclusion was clearly stated in th e insurance policy Medical (Health) Insurance 15- What is meant by medical (health) insurance? Medical (health) insurance refers to insurance policies which cover medical trea tment costs, medications, medical and therapeutic services and supplies and mana gement of medical programs. 16- What is meant by the benefit brought to the insured in medical insurance? Benefit brought to the insured refers to the costs of providing health services in cluded by the insurance coverage within the limits specified in the insurance co ntract. 17- What is meant by base of direct entry or in the company s account in medical in surance? Base of direct entry or in the companys account refers to the facilities of no-paymen t appointed by the company and available for the insured. All expenses incurred at these facilities are directly debited from the companys account. 18- What is meant by a service provider in medical insurance? Service provider is the person or health facility which is accredited and licensed according to applied regulations to provide medical services in the Kingdom, e. g., hospitals, diagnosis centers, clinics, pharmacies, laboratories and physioth erapy or radiotherapy centers. 19- What is meant by the service providers network in medical insurance? Service providers network is a group of health service providers accredited by the Council of Cooperative Health Insurance (CCHI) and specified by the insurance co mpany to provide the service for its policyholders. These service providers will

directly debit expenses from the insurance companys account upon the policyholde r presenting a valid insurance card. 20- What are the supporting documents when making a claim in medical insurance? All documents proving and confirming the age, nationality, identity of the insur ed as well as the validity of the insurance coverage, the circumstances of the i ncidence from which the claim resulted and repayment of costs. Supporting docume nts also include other documents such as: bills, receipts, prescriptions, doctor report, referral and recommendations and any other original documents that migh t be requested by the company. 21- What diseases and cases that are usually excluded by insurance companies fr om the medical insurance? Plastic surgery unless the surgery is necessary, e.g., as a result of a defacem ent ensuing from an accident Chronic diseases suffered prior to entering the current insurance contract such as diabetes Routine medical check-ups such as employment or travel checkup. Steroids and vitamins 22- Does the insured bear part of the medication cost or does the insurance com pany bear the whole cost? It depends on the type of policy; some policies do not require the insured to be ar any part of the cost while others stipulate paying a specific portion of the costs based on the companys agreement with the insured. In general, the value of the insurance policy providing full coverage for medical costs is higher than th e one that provides partial coverage for medical costs. Protection and Savings Insurance 23- What is meant by protection and savings insurance? Protection and savings insurance is a contract by which the insurance company as sumes to pay to the insurance beneficiary an amount or amounts including the sav ings proceeds on a future date in exchange for the insurance premiums paid by th e beneficiary. 24- What are the types of protection and savings insurance? There are several types of protection and savings insurance, such as: Protection insurance: Refers to insurance policies which cover risks related to death, permanent/ temporary and full/ partial disability of individuals or grou ps Protection and savings insurance: Refers to insurance policies under which the insurance company pays an amount or amounts including the savings proceeds, on a future date, against the premiums paid by the insured Regulatory 25- What are the prevailing insurance laws and regulations in Saudi Arabia? In Saudi Arabia, the insurance legal framework is composed of: The Law On Supervision of Cooperative Insurance Companies The Implementing Regulation The topic-specific regulations, e.g.: Market Code of Conduct Regulation, the Ri sk Management Regulation, the Anti-Fraud Regulation, the Anti-Money Laundering a nd Combating Terrorism Financing Regulation, etc., and all other circulars and g uidance notes issued by SAMA 26- Who defines the regulations about insurance and how? SAMA defines all topic-specific regulations, circulars and guidance notes about insurance. The definition process contains 3 steps: SAMA identifies the need to define a new regulation SAMA drafts the law and posts it for public consultation on its website (for 20

to 60 days). During that time, professionals and the public are invited to comm ent on the new regulation SAMA reviews the comments received, updates the regulation and publishes it on its website Licensing 27- What is the process to obtain an insurance and/or reinsurance license? The insurance and/or reinsurance licensing process entails five main steps, name ly application submission, file review, Royal decree issuing, IPO and license is suing. The process can take up to 16 months, depending on its content. Step 1: Application Submission Step 2: File Review Step 3: Royal Decree Issuing Step 4: Initial Public Offering Step 5: License Issuing 28- What are the required documents to submit when applying for a license? There are 8 supporting documents to be submitted along with the application for insurance/reinsurance company license or insurance/reinsurance service provider license: 1. Completed license application form 2. Memorandum of association 3. Articles of association 4. Organizational structure/ chart 5. Feasibility study 6. 5 year operation plan to include as a minimum the following Insurance types which the Company intends to practice The ability to entrust or accept re-insurance agreements for the types to be re -insured Product marketing plan Expected costs to commence the activity and necessary financing sources Expected activity growth rates taking into consideration the solvency margin re quirements Expected number of staff and Saudi appointment / qualifying plan Annual expenses based on the expected activity growth rates Estimated financial statements linked to growth expectation Statement of the technical basis of the insurance operations and a certificate by an actuary confirming that the basis, advantages and restrictions of insuranc e operations are sound and enforceable Branch allocation and operation plan 7. Any agreements with other parties 8. Irrevocable Bank guarantee for an amount equal to the required capital i n favor of the Agency issued by a local bank and to be renewable automatically u ntil the capital has been paid up in full 29- Can SAMA revoke the license of an insurance or reinsurance company/ a servi ces provider? Yes, if necessary SAMA can revoke any insurance or reinsurance company or servic es provider license. 30- What is the process to obtain an insurance services providers license? The insurance and/or reinsurance licensing process entails 4 main steps, namely application submission, file review, commercial registration issuing, and finall y license issuing: Step 1: Application Submission Step 2: File Review Step 3: Commercial Registration Issuing from the Ministry of Commerce Step 4: License Issuing 31- Which companies are licensed to operate in Saudi Arabia? To obtain the full list of insurance companies licensed to operate in Saudi Arab

ia, visit the Licensed Companies section Product Approval 32- What is the File and Use approval? There are two types of insurance products approvals namely File & Use and permanen t approvals: ISD grants the File & Use, a form of temporary approval, upon the submission of t he complete product approval submission. During the File and Use period, ISD revie ws the product in order to decide to permanently approve/ decline it. Medical Ex penses, Motor, and all Savings and Protection products other than employer spons ored Group Life are explicitly excluded from the File & Use process. When SAMA grants a permanent product approval, the insurance company can commer cialize the product permanently on the Saudi market. 33- What is the process to get a new insurance product approved by SAMA? The product approval process entails 3 steps, namely the product approval applic ation submission, application review and finally the product approval/ decline i ssuing. Step 1: Product approval application submission The request should be made to ISD in both soft and hard copy versions and in bot h Arabic and English language and accompanied by the following documents for app roval: The The The The proposal form. policy wording and endorsement. policy schedule. reinsurance treaties.

Step 2: Application review ISD will contact the insurance company to obtain further documentation and infor mation. Step 3: Approval/ Decline Issuing Once the product review is complete, SAMA notifies the company of the products pe rmanent approval/ decline. 34- What is the expected timeline for a product to be approved? There is no specific timeline for a product to be approved. The necessary time t o approve a product depends on the type and complexity of the product. 35- What criteria are assessed in order to approve a product? ISD supervisors verify the compliance of the products with the requirements of t he insurance law, the Implementing Regulation and other SAMA regulations. 36- Should all products be approved prior to commercialization? All insurance products must be approved under either File & Use or permanent appro val before their commercialization Supervision 37- What is the supervision process? The supervision process of ISD encompasses four supervision activities namely on -going monitoring, compliance assessment, off-site examination and on-site inspe ction: The on-going monitoring includes the financial supervision which monitors the h ealth of the Saudi insurance market and complaints analysis which assesses insur ance companies conduct towards policyholders The compliance analysis assesses the compliance of companies with the insurance

law and SAMAs regulations The off-site examination remotely draws the risk profile of regulated entities The on-site inspection completes the risk profile of regulated entities by cond ucting a visit to the premises of the company 38- Are all the companies reviewed on a regular basis? And how often does an as sessment occur? All the regulated entities are reviewed on a regular basis by ISD supervisors: The financial strength is monitored throughout the year The off-site examination and compliance analysis are conducted on an annual bas is The on-site inspection is performed every one to three years 39- Who performs the supervision of insurance and reinsurance companies? ISD supervisors perform the supervision of regulated entities. Each supervisor i s assigned a regulated entity to supervise. During on-site inspections, the regu lated entity should expect to receive in its premises a team of three to six sup ervisors. Financial Reporting 40- What is financial reporting, why is it important? Financial reporting is the provision of financial information to ISD for review and analysis. Financial analysis allows ISD to monitor the health of the Saudi i nsurance market. 41- Which companies are required to submit their financials to SAMA? And how of ten? Licensed companies are required to submit the following financial returns to SAM A: Quarterly and Annual audited financial statements for SAMAs approval before publ ishing Monthly, Quarterly and Annual prudential returns using the financial reporting forms 42- Where can a company obtain the latest version of the financial reporting fo rms to be submitted to SAMA? To obtain the latest version of the financial reporting forms, visit the Forms page. 43- What accounting standards are followed by the financial reporting forms? The financial reporting forms were developed in accordance with the Internationa l Accounting Standards (IAS) and the Implementing Regulation of The Law On Super vision of Cooperative Insurance Companies. Complaint Handling 44- How fast are insurance/ reinsurance companies and insurance/ reinsurance se rvice providers required to reply to policyholders complaints? The companies and service providers are required to reply to policyholders compla ints within 15 calendar days from the date of receiving the complaint as per art icle 45 of the Implementing Regulation. 45- What is the process to file a complaint against an insurance company or ser vice provider? The plaintiff should contact the general secretariat of the committees for resol ution of insurance disputes and violations in order to file a complaint 46- What information should be provided when filing a complaint against an insu rance company or service provider? The plaintiff should explain the circumstance that lead to filing the complaint against company and should provide proof to support his case (if available) alon

g with details on his policy number and contact information. 47- How can I follow-up on my complaint filed at SAMA? The plaintiff can follow up on his complaint by contacting CRIDV .