Saudi Arabia’s sole reinsurer, Saudi Reinsurance Company (Saudi Re), has announced the signing of a reinsurance contract with Malath Insurance Company.
The contract was signed on behalf of the Saudi insurance industry, where they will provide reinsurance coverage on the Inherent Defects Coinsurance Program (IDI).
The contract will be valid for five years.
Under the terms of the contract, Saudi Re will provide reinsurance treaty and facultative protection and expects that the contract will have a positive impact on both its sales and financial performance.
By the Council of Ministers Resolution, The IDI is a compulsory cover which requires all contractors involved in private sector construction projects to obtain an IDI policy.
Last March, the Saudi Arabian Monetary Authority (SAMA) issued last a standard policy wording for the IDI specifying a duration of 10 years for the cover. The implementation of the IDI program will follow a phased approach over a three-year period.
More than 100,000 construction permits were issued in 2019 based on the data of the Ministry of Municipal & Rural Affairs (MOMRA). This new line of business is expected to drive growth in the Property and Casualty sector which represents 15% of the overall insurance market premium in Saudi Arabia.
Saudi Re Managing Director and Chief Executive Officer, Fahad Al-Hesni commented, “We are very excited to be given the opportunity to serve as the exclusive reinsurer to the Inherent Defects Coinsurance Program. This falls within Saudi Re objective to support its home market, and we welcome the initiatives led by SAMA to develop the insurance industry and enhance the market practices.
“The IDI is a 10-year long cover and we have arranged a special retrocession protection as risk management measure to manage this long-tail business.”
This news comes after Saudi Re announced the appointment of Dr Peter Hugger and Marc Maupoux to its board of directors.