Regulators in Saudi Arabia have enacted a ban on combining insurance and reinsurance brokerage activities in the same company, according to reports from Reuters.
The Saudi Arabian Monetary Agency (SAMA) said in a statement on Thursday that combined operations would be prohibited, effective immediately.
Companies that currently combine both insurance and reinsurance activities will have one year to adjust to the ban.
They will be required to submit plans to SAMA within three months, outlining how they will implement changes.
The Agency claims that the decision will increase the stability of the re/insurance sector in Saudi Arabia, while boosting its contribution to national economic growth, and reducing “wrong practices” in the industry.
Last year, SAMA issued a new set of rules for the licensing and supervision of foreign branches of insurance and reinsurance companies in the country.
These rules were similarly designed to support the development of the re/insurance industry in Saudi Arabia, while also ensuring the stability and resilience of its financial systems.
The restrictions follow on from reports in 2017, when SAMA warned that it was preparing tougher rules for re/insurers as part of a drive to create a smaller number of stronger market players operating in the country.
