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. Recent Developments in the Saudi Insurance Market
1. Mandatory Insurance
Recent events have changed the scope of the insurance market in Saudi Arabia. First, the
introduction of compulsary third party auto liability insurance policy. In October 2001 the
Council of Ministers issued a directive that all individuals operating vehicles in Saudi Arabia
must carry third party auto liability coverage. The directive was implemented near the end of
2002. Prior to this date residence are not legally required to have third party coverage. The
indiviudals were not holding insurance not only
due to absence of legal requirement prior to 2002. It was excerbated by a general lack of
awareness of the importance of insurance and the fact that majority of people have negative
stigma about insurance due to their religious beliefs. As a result many who are involved in an
auto accident were unable to pay the claims. This has led to over utilization of the Shariah court
and the jails. Saudi govenunent concluded that requiring automobile drivers to carry third party
coverage will mitigate this problem. Once the directive was implemented gross auto insurance
premium increased from $203m (SR762 million) in 2002 to $310 (SRl,161 million) in 2003. It
estimated that the auto insurance premium will reach $1.34b (SR5 billion) by 2009.
Second is the introduction of compulsary medical insurance for expatriate employees starting
June 2005. The law calling for mandatory medical insurance for the estimated 7 million
expatriates working in Saudi Arabia was passed in August 1999. However, the govenunent was
