The Cabinet approves the rules for insurance dispute committees to support the sector

In an important regulatory step aimed at enhancing the stability and efficiency of the insurance sector in the Kingdom of Saudi Arabia, the Council of Ministers, during its session held in Jeddah, chaired by His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al Saud, Crown Prince and Prime Minister, approved the rules and procedures for the work of the committees for settling insurance disputes and violations.

Historical background and context of the decision

This decision comes amidst the rapid developments in the Saudi insurance sector, a key pillar of the Financial Sector Development Program, one of the programs under the Kingdom's Vision 2030. Historically, insurance disputes were adjudicated by specialized committees operating under the supervision of the Saudi Central Bank (SAMA). With the significant growth in market size and the increasing complexity of insurance products, the need for a more specialized and sophisticated legal framework has become apparent.

The establishment of the Insurance Authority in August 2023 marked a pivotal turning point, as it became the independent body responsible for regulating and supervising the sector. The adoption of the new rules for the adjudication committees is a complementary and necessary step to enable the Authority to perform its duties and provide a specialized judicial infrastructure capable of handling all aspects of insurance disputes efficiently and effectively.

The importance of the decision and its expected impact

The importance of these new rules lies in their ability to create a multi-dimensional positive impact at the local and economic levels:

• Protecting policyholders' rights: The new rules provide a clear and rapid mechanism for policyholders (individuals and companies) to submit complaints and claims, ensuring they receive a fair and just settlement in the event of a dispute with insurance companies. This enhances public confidence in the insurance sector and encourages increased demand for insurance products.
• Enhancing transparency and market stability: By establishing standardized and specific procedures, these rules contribute to unifying judicial practices related to insurance disputes, giving insurers and investors a clear view of the legal framework and reducing operational risks.
• Stimulating the investment environment: An effective and reliable judicial system is a key factor in attracting both local and foreign investment. Investors seek markets with clear dispute resolution mechanisms, which this decision provides to the Saudi insurance sector.
• Relieving the burden on the general courts: The existence of specialized committees means that insurance cases, which require precise technical and legal expertise, will be dealt with by experts in the field, which speeds up the pace of case resolution and reduces the pressure on the general justice system.

Future outlook

This regulatory step is expected to contribute to the maturation of the Saudi insurance sector, increase its contribution to GDP, and support the growth of other economic sectors that rely on insurance services to manage their risks. It also aligns with the global trend toward establishing specialized judicial bodies for vital sectors, further solidifying the Kingdom's position as a leading regional financial center.