The Insurance Authority (IA) has approved a regulation setting out licensing requirements for underwriting activities by insurance companies and Managing General Agents (MGAs), as part of its efforts to develop the regulatory framework of the insurance sector and enhance professional standards. The IA stated that the move also aims to support market stability, strengthen governance and promote growth and transparency.
The key requirements that must be met to practise underwriting activity, include:
Obtaining a licence from the Insurance Authority prior to commencing operations
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Locating the company’s headquartered in Saudi Arabia
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Maintaining a minimum capital of SAR1m ($266,500)
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Securing professional indemnity insurance coverage of at least SAR3m
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Ensuring the availability of qualified professionals and specialised technical expertise in underwriting
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Meeting governance, compliance, and risk management requirements
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Submitting a business plan and a clear organisational structure when applying for a licence
The regulation sets out clear procedures for submitting licensing applications, including the provision of statutory documents, a business plan, and a financial study, as well as compliance with supervisory requirements. The Authority will review and decide on applications within specified timeframes, said the statement.
The Authority confirmed its readiness to receive applications for underwriting activity licenses in accordance with the provisions and requirements set out in the approved regulation.
The IA statement emphasised that underwriting is a core function in the insurance sector, involving the assessment of risks, the structuring of terms and pricing of premiums, which are key elements in ensuring disciplined pricing and effective risk management.