The English version of this document is for guidance only.
The Arabic version is the governing text.
Insurance in the Kingdom of Saudi Arabia shall be provided by insurance companies registered in the Kingdom operating in accordance with the practice of cooperative insurance in line with the provisions of the Articles of Incorporation of the National Company for Cooperative Insurance issued by Royal Decree No (M/5) dated 17/4/1405 H, and not inconsistent with the provisions of Shari'ah.
Subject to the provisions of the Law of Cooperative Health Insurance issued by Royal Decree No. (M/10) dated 1/5/1420 H, the Saudi Arabian Monetary Agency shall, in connection with the application of this Law, have power to:
An Insurance or re-insurance company may not be formed in the Kingdom of Saudi Arabia except by a license issued pursuant to a Royal Decree upon a resolution by the Council of Ministers and a recommendation by the Minister of Commerce and Industry according to Article Two of this Law, and subject to the following:
The implementing regulations shall specify the insurance operations governed by this Law, and each insurance company shall specify the types of insurance it shall provide.
An insurance or re-insurance company - upon commencing business - may not suspend its insurance activities without the prior approval of the Saudi Arabian Monetary Agency. This is to ensure that insurance companies take all necessary measures to safeguard the rights of the insured and the investors.
Selection of members of the board of directors of insurance and re-insurance companies shall be subject to the approval of the Saudi Arabian Monetary Agency in accordance with the criteria specified for in the implementing regulations.
The chairman of the board of directors of insurance or re-insurance company, managing director, a member of the board of directors and general manager shall be liable, each within the limits of his authority, for the company's violation of any of the provisions of this Law or its implementing regulations.
The Saudi Arabian Monetary Agency may inspect the records and accounts of any insurance or re-insurance company through the Agency's employees or auditors appointed by it, provided that the inspection be carried out at the site of the insurance or re-insurance company. In this case the employees of the company shall submit whatever is in their possession or under their authority or records, data, and documents requested from them, and disclose any information they have, relating to the company, to the employees of the Agency or whoever it may appoint as auditors.
An insurance or re-insurance company may not open any branch or office inside or outside the Kingdom, agree to merge with, own any insurance or banking activity, have control thereof, or own shares of another insurance or re-insurance company without the written approval of the Saudi Arabian Monetary Agency.
The Saudi Arabian Monetary Agency may at any time request any insurance or re-insurance company to submit to it– at the time and in the form it determines– any information it deems necessary to fulfill the purposes of this Law. It shall also send to the Saudi Arabian Monetary Agency at its request the following:
It is prohibited for any person who obtains any information, while carrying out any work related to the application of the provisions of this Law, to disclose or benefit from it in any way.
All insurance and re-insurance companies shall submit to the Department of Zakat and Income Tax their zakat or tax returns, the audited financial statements and any other information or documents which the Department deems necessary for the purpose of determining the amount subject to zakat or taxation in accordance with the provisions of the Tax Law, the Zakat Collection Law and their implementing regulations and payment of the sums due, within the times specified by the Law.
Insurance and re-insurance companies governed by this Law shall deposit in one of the local banks, a legally required deposit to the order of the Saudi Arabian Monetary Agency, and the implementing regulations shall determine the restrictions relating to this deposit.
The insurance and re-insurance companies shall allocate a part of their annual profits, not less than 20%, as a legal reserve, until the total reserve amounts to 100% of the capital paid.
All insurance and re-insurance companies shall setup the required reserves for their insurance types, and other reserves as provided for in the implementing regulations of this Law.
All insurance and re-insurance companies governed by the provisions of this Law shall keep a separate account for each type of insurance as specified in the implementing regulations of this Law. They shall also keep records and books to record insurance policies issued by the company, names and addresses of the holders of such policies and the date of concluding each policy, its effectiveness, prices and conditions provided for in it. Any change or amendment occurring in such policies shall also be recorded in these records and books. The Saudi Arabian Monetary Agency may issue the decisions it deems necessary to compel insurance companies to record in the books and records any data it deems necessary to exercise its authority of control and supervision. The data contained in the records and books mentioned above may be entered in the computer in accordance with the rules and procedures provided for in the implementing regulations of the Law of Commercial Books .
The Saudi Arabian Monetary Agency shall set the necessary conditions for issuing licenses to practice self-employment professions relating to the insurance activity, especially the following:
Licenses for these professions shall be issued by the Ministry of Commerce and Industry, and the Saudi Arabian Monetary Agency shall control and supervise the activities of the professions referred to.
If the Saudi Arabian Monetary Agency finds that any of the insurance or re-insurance companies has violated the provisions of this Law or its implementing regulations or followed a policy liable to adversely affect its ability to fulfill its obligations, the Agency may take one or more of the following measures:
If the Agency finds that the company persists to violate the provisions of this Law or its implementing regulations and does not respond to any of the measures taken by the Agency in accordance with this Article, and despite the infliction of the punishments provided for in this Law, the Agency may request the dissolution of the company.
One or more committees shall be formed based on a Resolution by the Council of Ministers, upon the recommendation of the Minister of Finance, composed of three specialized members, at least one of whom shall be a legal counselor, to be entrusted with the settlement of disputes occurring between insurance companies and their clients, or between these companies and others that may substitute for the insured, and shall decide on cases of violations of control and supervision instructions for the licensed insurance and re-insurance companies, and the violations of those practicing self-employment professions referred to in Article Eighteen of this Law. Prosecuting before the Committee – in connection with these violations – is represented by the employees appointed by a decision of the Minister of Finance.
Decisions of these Committees may be appealed before the Board of Grievances.
Article Twenty One:
Without prejudice to any harsher punishment provided for in any other law, anyone who violates any provision of this Law shall be punished with a fine not exceeding one million riyals and imprisonment for a period not exceeding four years, or by either.
Article Twenty Two:
Without prejudice to the powers of the committee provided for in Article Twenty of this Law, the Board of Grievances shall have jurisdiction in the following:
Article Twenty Three:
The implementing regulations of this Law shall be issued by a decision of the Minister of Finance, and shall be published within sixty days from the date of publication of this Law, and shall come into effect on the date of the enforcement of this Law.
Article Twenty Four:
Subject to what is stated in Article One of this Law whatever is not provided for therein shall be governed by the Companies Law, to the extent permitted by the nature of such type of companies.
Article Twenty Five:
This Law shall be published in the Official Gazette and shall come into effect after ninety days from the date of its publication.