Co-insurance agreement distributes covered risks, ensures fair pricing: SAMA

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The Saudi Central Bank (SAMA) said that under the joint insurance agreement, covered risks will be distributed among a number of insurance companies through a common insurance pool.

The risk will be divided into multiple shares and the management of the pool will be assigned to one company, making it the leader that manages the pool on behalf of the participating insurance companies.

This agreement is often used to cover high or new risks, which are difficult to be measured in Saudi Arabia, for example, mandatory insurance for hidden defects, and mandatory travel insurance for citizens traveling out of Saudi Arabia, including the benefits that cover COVID-19 infection risks.

SAMA pointed out that the agreement’s most prominent positive aspects are achieving fairness and efficacy in pricing, through the efficient distribution of risks and the possibility of covering a larger number of the insured.

It also includes facilitating obtaining insurance policy with a unified mechanism, increasing the quality of service for the insured, and speeding up the processing of claims.

According to data compiled by Argaam, a total of 12 Saudi-listed insurance services providers signed on May 10, 2021, an agreement to participate in an insurance pool with some companies, under the management of the Company for Cooperative Insurance (Tawuniya).

These insurance firms are Al Alamiya for Cooperative Insurance Co., Allianz Saudi Fransi Cooperative Insurance Co. (Allianz SF), Walaa Cooperative Insurance Co., Gulf General Cooperative Insurance Co., The Mediterranean and Gulf Insurance and Reinsurance Co. (MEDGULF), Al-Rajhi Company for Cooperative Insurance (Al-Rajhi Takaful), AXA Cooperative Insurance Co., Buruj Cooperative Insurance Co., Al-Etihad Cooperative Insurance Co., Malath Cooperative Insurance Co., Al Sagr Cooperative Insurance Co., and Arabian Shield Cooperative Insurance Co.