OMAR HAFIZ President and CEO of Allied Cooperative Insurance Group

Bringing order to growing £1 billion market
ACIG

In October 2003, the Saudi Arabian Government enacted the Control Law for Co-Operative Insurance Companies, effectively bringing regulation to an unregulated environment. Until then, the National Company for Cooperative Insurance (NCCI) had a monopoly on all government business, and up to 100 foreign-registered firms dealt with the private insurance sector. With the privatisation of the NCCI, the government aimed to establish a number of Saudi firms that would operate in keeping with Islamic principles.

All insurance companies operating in the Kingdom now need to be locally registered, publicly owned firms, operating on a co-operative or mutual basis, with foreign participation limited to 49 per cent. New entrants need to establish a locally incorporated cooperative insurance joint-stock company, while existing foreign insurance providers have been granted a three-year transition period during which they must convert to either a Saudi cooperative insurance company or to a direct branch of a foreign insurance company. All firms are now supervised by the Saudi Arabian Monetary Agency (SAMA).

Like many insurance companies in the Kingdom, the Allied Cooperative Insurance Group (ACIG) saw its recent IPO massively oversubscribed. ACIG was a small, specialist company dealing with the motor insurance sector. Now, explains Dr Omar Hafiz, President and CEO, since the implementation of a new law that promotes the health insurance sector, the company is seriously studying the most profitable areas in the Kingdom, with a strong determination to focus on the health market in particular.

From the beginning of 2006, all companies employing 500 or more expatriate workers have been required to provide them with medical coverage; a second phase for companies employing 100-500 expatriate workers is currently being implemented. The third and final phase will involve all other companies that employ expatriates.

The current value placed on the Saudi insurance market has been estimated at approximately SAR8 billion (£1.05 billion), with expectations of a leap to SAR18 billion (£2.37 billion) in the next five years, and ACIG sees itself comfortably benefiting from this growth.

“Bearing in mind that there are around eight million expatriates in Saudi Arabia, and considering that an average cost for each health insurance policy at 700 to 800 riyals, this amounts to around SAR5.6 billion (£739 million). Expatriates are required by law to obtain these insurance policies. Once companies have completed the insurance coverage for expatriates, Saudis working in the private sector will have to be insured. If we include Saudis in the private sector, our calculations could reach up to £1.9 billion. This is only in medical insurance, and if we add motor insurance, we add another SAR2 billion (£264 million). Other types of business may add another billion, to reach a total of £2.4 billion in the next three years,” says Dr Hafiz.

“The market is booming and we are over-achieving our projections in all aspects of the business. We aim to be one of the five top insurance companies in Saudi Arabia.”