Third party automobile insurance is now on mandatory in the Saudi Kingdom under a new motor insurance law. The directive, which takes effect today, November 20, is aimed to ensure that drivers involved in road accidents cannot avoid paying damages.
Third-party cooperative car insurance policies will cover vehicles and property damages as well as injury or death to victims of an accident in which the insured party is involved. Policies are available for purchased only from the National Company for Cooperative Insurance (NCCI)
NCCI offers the policies directly as well as through branches of the National Commercial Bank (NCB) and Al-Rajhi Banking and Investment Corporation. NCCI, one of the major insurance companies in the Gulf region, is reportedly negotiating brokerage deals with a dozen local companies.
The scheme will be implemented gradually. In its first phase, the compulsory automobile insurance scheme is expected to cost two million Saudi car-owners an estimated 2.5 billion Saudi riyals ($667 million). Third-party insurance is mandatory for all Saudi local and transit drivers.
Policy rates range from SR360-530, reported Saudi daily Arab News. Drivers, who will not meet the November 20 deadline, would not be able to issue new driving licenses, renew or replace old ones or pay for traffic tickets, until they issue valid insurance policies.
Official sources estimate the volume of the Saudi insurance market at SR13 billion per annum, only two billion SR in motor insurance policies. The introduction of compulsory auto insurance joined a compulsory medical insurance imposed on non-Saudi residents of the kingdom in 2001. Both are expected to boost local insurance business over the next year. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
