Saudi Arabia, the birth of a market

We shall be referring to the main provisions existing in the new regulation published in Saudi Arabia following the royal decree number 125 dated 05/14/1424 H, corresponding to August 22, 2003.
Photo credit: US Gov / CIA World Factbook

The birth of a market

As a reminder, no company is authorized to operate an insurance activity, nor is one registered in the Saudi Kingdom except NCCI. whose headquarters are in Bahrain, that is, in a different country.
By officializing insurance activity, the new decree brings about a fundamental change in the evolution of the Saudi market.

Legal aspect

In order to be able to operate in an insurance activity, companies must be registered in Saudi Arabia.

They must operate in accordance with cooperative principles.

The companies must assume the profile of joint-stock firms.

The supervising authority

The Saudi Monetary Agency is in charge of the enforcement of the new regulation. It is entrusted with receiving license applications, which are submitted to the Ministry of Commerce and Industry for approval. SAMA is equally responsible for the technical monitoring of insurance activities.

The creation of new offices or subsidiaries within or outside Saudi boundaries is subjected to SAMA's written approval.


Licenses are delivered by the Ministry of Commerce and Industry.

Licenses are published by royal decree following a ministerial council resolution and the approval of the Ministry of Commerce and Industry.

Fields of activities

Companies are not authorized to operate in activities other than insurance and reinsurance.

Insurance companies cannot invest in insurance brokerage firms and reinsurance companies are not allowed to hold shares in reinsurance brokerage firms. Nonetheless, direct insurance companies could benefit from interests in reinsurance brokerage firms.


The capital of an insurance company shall not be below 100 000 000 SAR (26 665 000 USD) and that of a reinsurance company cannot be inferior to 200 000 000 SAR (53 284 000 USD).

Each company is required to deposit a guarantee worded for SAMA at a local bank.

The minimum capital required to carry out the activities of:

ActorMinimum capital (SAR)Minimum capital (USD*)
Insurance brokers
3 000 000800 000
Insurance agents
500 000133 000
150 00040 000
Loss adjusters
500 000133 000
Loss management and settlement
3 000 000800 000
150 00040 000

* 1 USD = 3.7503 SAR

The management of companies

SAMA must approve the appointment of the board of directors.

The chairman of insurance and reinsurance company, the manager or the general director are accountable to SAMA for any breach of the new regulation.

The general assembly of each company shall appoint two auditors on an annual basis, who are approved by the authorities. It must also define their honorarium.


SAMA is mandated to inspect the books and accounts of insurance and reinsurance companies. This inspection may be carried out by SAMA's own employees or by auditors accredited by the agency.


Insurance and reinsurance companies will devote 20% of their annual profit to the item of legal reserves.

Disputes and sanctions

One or several specialized committees created on the recommendation of the finance ministry settle the disputes between insurers and insured.

The non-respect of the new regulation is liable to a maximum fine of 1 000 000 SAR (267 000 USD), and a four-year prison sentence, or by either one of the two sanctions.

Source: Atlas Conseil International
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