Crown Prince Naif Bin Abdul Aziz, Deputy Premier and Minister of Interior, has directed vehicle insurance companies to partially reimburse policy holders if the insured vehicle is sold. The decision comes after a report by the Saudi Arabian Monetary Agency (SAMA) and Public Security represented by the Traffic Department on the unification of a draft policy on compulsory vehicle insurance. The Crown Prince's decision also includes amendment to several Articles of the traffic law issued some four years ago. According to amended Article (8-15), in the case of an accident involving an insured vehicle, the insurance company is obliged to compensate affected parties according to the rules of the unified compulsory insurance policy (document) on vehicles issued by SAMA. If insurance companies try to circumvent the law and attempt to justify delaying payment of the dues to affected parties, the General Traffic Administration shall notify SAMA about it. In 2002, owing to the high rate of car accidents, Saudi Arabia made third-party liability motor vehicle insurance for in-country transit of foreign vehicles along with driver license (Rukhsa) insurance compulsory for Saudi nationals and expatriates within the country. The compulsory insurance initiative coupled with a growth in the number of cars registered in the Kingdom has translated into a huge business opportunity for insurers. With the expected boom in the economy, it is thought that the car market will continue to grow. In the beginning of 2007, third party liability motor vehicle insurance was made compulsory for all registered vehicles within the Kingdom. According to a new research report “Saudi Arabia Insurance Market to 2012”, the motor insurance segment is projected to grow at a compound annual growth rate of 30 percent between 2010 and 2012. The fast growth rate will be achieved on the back of promotional strategies deployed by the government. With the strong prospective growth in auto sales, the premium of motor insurance will increase as vehicle insurance has been made compulsory in the country. __
