The authorities have formed a specialised technical committee for pricing coverage offered by the Saudi Pool for Marine War Risk Insurance, according to Mr Tariq bin Ali Al-Fayez, Chairman of the National Insurance Committee at the Federation of Saudi Chambers.
He said that the goal is to provide coverage at reasonable risk premiums compared to the exceptional levels witnessed in the markets following the recent escalation of geopolitical tensions in the Middle East, the news platform Al-Arabiya.net reported on 15 September. He also indicated that the Pool could begin operations shortly.
He added that the success of the Pool should not be measured solely by the reduction in insurance premiums, but also by the availability of coverage when needed. He stressed that the basic economic value of the initiative lies in maintaining the smooth flow of foreign trade.
Separately, Mr Ziyad bin Mohammed Al-Rubaish, CEO of Arabia Insurance Cooperative Co (AICC), told Argaam that the company is participating in the Pool, as part of its efforts to support national initiatives, in addition to developing its business in marine insurance. He said that the company views its participation in the Pool as long-term and strategic.
He stated that the establishment of the Pool represents an opportunity to enhance the Saudi market’s ability to deal with specialised risks, by combining the absorptive capacities and technical expertise of the participating companies within an organised national framework.
He stressed that the goal of the Pool is not to dispense with global reinsurance markets, but rather, to achieve a more balanced mix of local and foreign capabilities, given that maritime risks associated with war can be large and cumulative in nature.
He pointed out that external reinsurance will remain an important tool for distributing risks and protecting companies’ capital, while the added value of the pool lies in strengthening the position of the Saudi market and increasing its ability to manage risks and retain a larger share of them locally whenever it is technically feasible.
Names of Pool participants yet to be announced
Following the approval by the Saudi Cabinet and the Insurance Authority to establish the Pool, Saudi Reinsurance was officially appointed to lead and manage the initiative.
While the broader pool operates as a national public-private framework where local insurance companies participate to provide cargo and hull war-risk cover, specific individual insurance companies have not yet been publicly announced.