Cooperative Insurance Companies Control Law

Purpose and scope

• Insurance in the Kingdom is provided by insurers registered there operating on a cooperative basis (Article 1); the central bank supervises the sector and sets rules protecting beneficiaries and insurers' ability to pay (Article 2 as amended).

Key rules, rights and obligations

• An insurer or reinsurer may be set up only under licence, its capital changed only with central bank approval, and an insurer may not own insurance brokers (Article 3 as amended).
• The general assembly appoints two audit firms each year (Article 10), and disclosing information obtained in applying the law is prohibited (Article 12).

Violations, penalties and common problems

• On breach the central bank may take measures and impose penalties, and may announce them once final to protect policyholders (Article 19 as amended).
• Insurance or support services without a licence: a fine of up to two million riyals and up to four years in prison, or either; other breaches: up to two million riyals plus up to ten thousand riyals per day of continuation, with possible publication (Article 21 as amended).
• Common problems: rejected or delayed claims, and disputes over policy exclusions.

Procedures and key deadlines

• The competent committees decide disputes arising from insurance contracts between insurers, clients and beneficiaries, and objections to central bank penalties filed within thirty days of notice (Article 20 as amended).
• Policyholders should file claims in writing with documents and keep proof of filing and its date.

An advisory summary prepared by Al-Bayan Al-Wadih Law Firm. It is not an official text and does not replace the law, its implementing regulations, or advice from a specialised lawyer. The official published text and its amendments prevail.