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Riyadh — Motorists who have clean traffic records will get a discount in mandatory motor insurance policies as per the Saudi Arabian Monetary Authority (SAMA) instructions.
The new SAMA instructions are applicable from Saturday (April 1, 2017).
The discount is calculated based on the number of years a policyholder has not made a claim. The discount could go up to 15% for one year and up to 30% for three years if no claim has been made.
According to the instructions, insurance companies may also offer a no-claims discount for individuals’ comprehensive motor insurance.
Insurance companies may provide a further loyalty discount of up to 10% to their clients.
However, the loyalty discount should only be provided upon renewal of a motor insurance policy with the same company.
In its circular issued on Dec. 26, 2016, SAMA said that these instructions form part of its role to protect policyholders and promote fair competition in the insurance sector to ensure better insurance service at competitive rates.
In the case of pricing of motor insurance policies, the insurance sector in general has not been giving any benefit to policyholders who have claim-free record.
This means that policyholders who are less likely to make claims incur a part of insurance costs for policyholders who are more likely to make claims.
Basem Odeh, Chairman of the Insurance Executive Committee, said the insurance sector is looking forward to implementing these important instructions, which support the principle of fair pricing and rewarding policyholders who comply with traffic laws and safe driving rules.
He also expressed hope that the new mechanism approved by SAMA would raise public awareness about the importance of safe driving.
Adel Al-Issa, official spokesperson for insurance companies, said the insurance sector will be ready to follow SAMA’s instructions in a timely manner since they are developing an automated system to meet the new pricing requirements.
He said the sector has been working closely with SAMA to develop an easy-to-use electronic tool to check previous records of insurance applicants.
He also stressed that clients must be aware of their rights. In case of non-compliance of SAMA instructions, clients can submit their complaints to the insurance company concerned.
In case the company fails to address the complaints within a reasonable time frame, clients can file a complaint to SAMA’s Consumer Protection Department. In case they suffer any breach of their rights or any unfair practices or fraud, clients may exercise their rights by filing complaints to SAMA.
© The Saudi Gazette 2017
