COOPERATIVE HEALTH INSURANCE Octorber 2010, Issue 11

Transcription

1 COOPERATIVE HEALTH INSURANCE Octorber 2010, Issue 11 Claims Management Companies Between the hammer and the anvil Dr. Musaed Al-Salman, Dean of the Faculty of Medicine at King Saud University, King Saud University alone contributes to over 40% of medical studies in KSA Mandatory Health Insurance for Citizens in Private Sector: Conflicting Perspectives

2 Exclusive Agent شركة ا تحاد التجاري للتا مين وإعادة التا مين التعاوني Trade Union Cooperative Insurance & Reinsurance Company Al-Khobar Main office P.O.Box Al-Khobar Kingdom of Saudi Arabia - Telephone: Fax: info@tui-sa.com Al-Khobar Tel.: Fax: In the name of Allah, the most gracious, the most merciful And when I am ill, it is He Who cures me True are the words of Allah We offer you Health Insurance services and programs in compliance with the requirements of the Council of Cooperative Health Insurance (CCHI). Riyadh Tel.: Jeddah Tel.: Makkah Tel.: Fax: Fax: Fax: Hufof Tel.: Fax: Editor-in-Chief: Dr. Abdullah Bin Ibrahim Al-Sharif Secretary General of the Council of Cooperative Health Insurance asharif@cchi.gov.sa CEO: Asst.Editor In Chief Mohammed S. Al Hussain Asst. Gen.Secretary of Admin & Finance of the Council of Cooperative Health Insurance Consulting Committee: Dr. Mansour Bin Nasser Al-Hawasi (MOH) Deputy for Executive Affairs Member of the Council of Cooperative Health Insurance Dr. Mousaa id Bin Mohammad Al-Salman Dean of the Faculty of Medicine, King Saud University Member of the Council of Cooperative Health Insurance Mr. Sami Bin Abdullah Al-Moubarak Representative of the Ministry of Labor Member of the Council of Cooperative Health Insurance The General Secretariat of the Council of Cooperative Health Insurance PO Box Riyadh Phone: Fax: Editor-in-Chief: Associate Editor: Editors: Designer: Publisher: Rabih El-Amine rabiha@alefinternational.com Mustafa Shehab mustafas@alefinternational.com Amira Hamadeh Said Al-Hasanieh Syed Noori Mohammed Yasmeen Hinnawi Jihad Abu Hashim Alaa Edin Fahmi Distribution: P.O. Box: Riyadh 11372, Phone: info@alefinternational.com The reproduction or reprinting of any part of this magazine must have the express permission of the publisher, who reserves the right to initiate legal action against any violation. Editor s note With the expansion of the health insurance sector in Saudi Arabia, there s a lot happening as the past few months have seen several interesting and significant developments taking place in this field, which we would like to share with you. We, at the Cooperative Health Insurance Magazine, strive to meet our readers needs, as well as answer and highlight all their questions and concerns in order to promote the culture of insurance after it has already taken root in every house in the Kingdom. In this edition, our Cover Story focuses on the recent introduction of mandatory health insurance for Saudi nationals working in the private sector. We highlight the reactions of insurance and private companies to this binding decision, and the extent of satisfaction of the beneficiaries of Saudi nationals working in private companies. As you read, you will see that officials in the Secretariat of the Council have offered their candid view in order to put things in the right perspective. We have also conducted an opinion poll to find out just how satisfied employers are with the insurance services offered to their employees so that we get a bigger picture of this vital sector. This month, we introduce a new section called Issue of the Month where we shed light on the role of claim management companies in the insurance sector and their commitment to their role and the insurance sector, in general. Just like we did in our previous editions, we highlight a company operating in the health insurance sector. We also met with the Dean of the Faculty of Medicine at King Saud University, Dr. Musaed Al-Salman, to ask him about services provided by university hospitals, the achievements of this sector, and its readiness to provide medical services in the context of the Saudi health insurance system. In this issue, we give an insight into the various activities of the Dallah Hospital in the context of social responsibility, and their current programs and future plans. There s a section featuring news and developments from the Council and the Secretariat General. We also take a wild trip to cover strange insurance news from around the world and cover the Italian experience in the field of health insurance. In view of the diversity of the insurance sector, we review its performance in the Kingdom, and across the region. In our Finance and Investment section, we look at managing assets for insurance companies, including investment surpluses and savings so as to strengthen the financial status. The beautiful Singapore is our choice for this issue s Travel section. Our Lifestyle section reviews the future of paper books in light of the increasing demand for e-books. We have many other exciting segments lined up for you, such as insurance news and funny stories, and finally, we leave you with a few words of wisdom and poetry. We hope you find the information and topics presented in the magazine useful and insightful. Editor-in-Chief Dr. Abdullah bin Ibrahim Al-Sharif

3 News 6 In the Spotlight 12 Tech World 36 The Council of Ministers in a meeting held on 11/03/1431AH approved the restructuring of the Council of Cooperative Health Insurance (CCHI) for a period of three years, starting on 10/16/1431AH. Solidarity Saudi Takaful Company (SSTC) was established as a joint stock company by the Royal Decree No. M/17 dated 20/3/1430H and a ministerial decision No. 83 dated 19/3/1430H corresponding to 15 March, Finance & Investment 32 A recent study published by the Saudi Arabian Monetary Agency (SAMA) revealed that the total investments of insurance companies in the Kingdom amounted to SR9,189 million. Google s Street View service, which offers 360-degree images of cities and streets, has been at the center of controversies since its launch in While some experts argue that the feature has helped people find locations and reach their destinations as it provides more detailed information than regular maps. Snippets 16 Social Responsibility 22 Lifestyle 40 Report And Analysis 44 Around the World 48 A conservative member of Germany s parliament wants overweight people to pay more for healthcare insurance, arguing that their unhealthy lifestyle is putting too much of a strain on hospitals. Hot Topic 18 Claims management companies play an important role in the insurance sector, especially because they are the link between insurance companies and insurers. Since it was established in 1987, Dallah Hospital, under the parent company (Dallah Al-Baraka) strived to provide community services and social programs including the pioneer program. In the recent years, Internet and computer technologies have revolutionized our life trends in every possible manner. Aided by regulatory authorities efforts, the MENA region s insurance market saw 26 percent compounded annual growth between 2005 and 2008, which was surpassed only by Central and Eastern Europe s 27 percent growth rate. Despite an average reputation and considerable prejudice, even among many Italians, Italy is in fact a country that offers low-cost health care and a good standard of medical assistance. Cover Story 24 Interview 28 Travel & Tourism 52 Two Opinions 56 The Council of Cooperative Health Insurance (CCHI) in its recent meeting held on July 5, 2010, made a very important announcement that would affect a large segment of Saudi citizens working in the private sector. Dr. Musaed bin Mohammed bin Saleh Al-Salman is the Dean of the Faculty of Medicine at King Saud University, University Hospitals Supervisor, and the representative of the university health sector at the Council of Cooperative Health Insurance. Singapore is a cosmopolitan country, and its essence lies in its multi-racial society. Arabs had played a dominant role in South East Asian trade since the foundation of Singapore in In the last couple of years, problems related to failure of medical services and the inability to provide treatment to patients, especially those suffering from chronic diseases, reached a critical point, calling for an immediate solution.

4 News Council s New Structure Approved The Council of Ministers in a meeting held on 11/03/1431AH approved the restructuring of the Council of Cooperative Health Insurance (CCHI) for a period of three years, starting on 10/16/1431AH. The Council will be headed by Health Minister Dr. Abdullah bin Abdul Aziz Al-Rabeeah, along with the membership of the following: Prince Dr. Bandar bin Abdullah bin Mohammed bin Miqren Al-Mashari Al- Saud, representative of the Ministry of Interior; Dr. Bandar bin Abdul Mohsen Kenawy, representative of government health sectors; Dr. Mansour bin Nasser Hawasi, representative of the Ministry of Health; Dr. Mohammed bin Yahya Al-Shahri, representative of government health sectors; Dr. Abdul Rahman bin Abdul Mohsen Al-Khalef, representative of the Ministry of Finance; Othman Bin Saleh Al-Haqil, representative of the Ministry of Labor; Ahmed bin Abdul Rahman Al- Abed Al-Ali, representative of the Ministry of Trade and Industry; Eng. Luay bin Hisham Nazer, representative of the Council of Saudi Chambers of Commerce; Ali bin Suleiman Al-Ayed, representative of Cooperative Insurance Companies; and Dr. Sami Bin Abdulkarim Al-Abdulkarim, representative of private health sector. And the Award Goes to.. Al-Subeih and Al-Gelehem Investment Officer Abdul Majeed Al-Subeih and Reliance Management Officer Abdulaziz Al-Gelehem were awarded the Ideal Employee of the Month awards for first and second quarters of 2010, respectively. They were chosen by the Secretariat of the Council. The Secretary General of the Council, Dr. Abdullah bin Ibrahim Al-Sharif said: This award is part of our motivational programs that aim to encourage our employees to take greater effort in improving themselves, and enhancing the Council s performance. The award is organized by the Secretariat of the Council periodically. Thanking one and all responsible for their success, both the winning employees promised to redouble their efforts in the future. They also thanked all their colleagues for their cooperation and wished them luck and success. Annual Staff Meeting to Raise Morale Second Forum for Cooperative Insurance concludes in Riyadh The Secretariat of CCHI recently held its annual staff meeting at the Holiday Inn Riyadh-Izdihar hotel. Dr. Abdullah bin Ibrahim Al-Sharif, Secretary-General of the Council, attended the meeting, along with assistant secretaries, directors of departments and staff. This annual meeting aims to build bridges of communication between our staff and the senior management. It allows us to listen to the suggestions of our staff and their concerns so as to provide them with an ideal environment to achieve the council s objectives, improve administrative management, and increase productivity, said the Secretary General of the Council. The meeting included activities that aimed to raise the morale of the employees and promote creative energy. The Islamic International Foundation for Economics and Finance recently organized the second forum for Cooperative Insurance, under the leadership of Dr. Abdullah bin Abdul Mohsen Al-Turki, Secretary General of the Muslim World League and Chairman of the foundation. A number of researchers, specialists, and members of the foundation attended the forum, which was also attended by its Secretary General Dr. Abdul Rahman Bin Saleh Al-Atram. In his opening speech, Al- Turki reviewed the objectives of the forum and pointed out the foundation s interest in understanding the major problems facing Islamic companies. The Islamic International Foundation for Economics and Finance is carrying out many economics and finance programs in cooperation with universities, institutions and specialized bodies, he said. We are working to achieve a number of objectives including: unifying principles, rules and concepts of Islamic economics and finance, solving the current financial problems, achieving integration between the foundation and other Islamic financial institutions and promoting the Islamic alternatives for the current financial transactions. He noted that the foundation is using the latest technologies to monitor information, study financial transactions and analyze them from an Islamic perspective. Some of its other activities include: organizing meetings, seminars and panel discussions on current economic and financial developments, exchanging information and studies with economic institutions and Islamic financial centers, providing consultation and training to Islamic institutions, disseminating periodical and non-periodical studies, and forming advisory committees. 6 Shawwal 1431 October 2010 COOPERATIVE HEALTH INSURANCE 7

5 Saudi Insurance Companies Dominate IPO Market Saudi insurance companies dominated the IPO market in the first half of 2010, as local regulations required they go public within a certain timeframe. New listings are being launched at a slower than expected pace due to continued economic uncertainty and dampened investor confidence, Ernst & Young s IPO update said in a report. The IPO (Initial Public Offering) markets in the Middle East witnessed a low level of activity in the first half of 2010, with the total value of 11 offerings dropping by nine percent to $1billion compared to the same period in 2009, according to Ernst & Young. However, regional IPO markets have shown an increase in the second quarter in a row this year, it said. According to the update, there was a 40 percent increase in total capital raised in the second quarter of 2010 ($590.6 million) compared to the first quarter ($420.5 million). Though the numbers are not at precrisis levels, the trend seems to indicate a movement away from the lower end of the market cycle. In the last three quarters, IPO activity was mainly seen in Saudi Arabia, Jordan, Qatar, Egypt and Syria. To really be on a path to recovery, we need to see new companies reaching out to investors in the other regional markets as well, said Phil Gandier, MENA Transactions Leader, Ernst & Young. The Middle East s largest IPO in the second quarter 2010 was Saudi-based Knowledge Economic City Company. It The cooperative health insurance sector is preparing itself to cover 850, 000 Saudis working in the private sector and their families in line with the decision of the CCHI. The Deputy of the National Insurance Committee, Council of Saudi Chambers, Mohamed Al- Amari, told Okaz newspaper that eligible insurance companies will be able to accommodate all of Saudi employees in the private sector and their families, but the problem remains in the ability of medical centers and hospitals to absorb this huge number. After the implementation of mandatory health insurance for expatriates, hospitals and medical centers were full; now, with the raised $272.0 million, 46 percent of the regional total. The regional IPO market has shown some signs of life on the back of increased Saudi investor confidence and companies in the insurance sector seeking funds. Unless sentiments improve, we believe the number of IPOs in the region will remain at similar levels, said Gandier. A Potential Problem That Could Affect Treatment of 850,000 Citizens in Private Sector addition of Saudis, will these hospitals be able to accommodate such large numbers? he wondered. Commenting on the profitability of insurance companies after the application of this decision, Al-Amari said that insurance companies will definitely achieve more revenues, but they must keep in mind the high cost of treatment in hospitals. Asked about covering Saudi employees in the private sector, he emphasized that all the big companies in the Kingdom, including banks and corporations, had insured their employees, Saudis or non-saudi, years ago, and that the remaining companies are those with a small number of employees. Three Million New Insurance Clients The new decision to cover Saudi nationals working in the private sector and their families would add three million customers to the Saudi insurance market, said Ahmed Khalifa, Executive Vice President, Technical, Al-Ahlia Cooperative Insurance Company. In an interview with Al-Arabiya, Khalifa said insurance companies are now preparing to cover Saudi employees and their families, and foreign workers working in small and medium-sized private companies. He added that eight major insurance companies would capture 50 percent of the new health insurance market, expecting revenues to be between SR2-2.5 billion. The big problem facing the implementation of the mandatory The ACE Arabia Cooperative Insurance Company has recently received a letter from the Saudi Arabian Monetary Agency (SAMA) allowing the company, temporarily, to sell and market 13 insurance products for a period of six months. According to Al-Eqtisadeya newspaper, the products that were approved for sale and marketing are: personal accident insurance, broken Arab insurance companies have regained their balance, according to a statistical report prepared by the Group of Economics and Business. After a decline of 33 percent in the previous year because of the global financial crisis and its repercussions, Arab insurance companies were able to achieve 14.1 percent growth in profits. Gulf insurance companies, according Al-Eqtisadeya newspaper, seized about 85 percent of the total market capitalization of listed companies, health coverage is not related to the capacity of insurance companies to absorb new customers, but it is all about the capacity of health institutions and hospitals to provide services to all recipients of health coverage, Khalifa added. The CCHI has recently mandated private companies to provide health insurance for Saudi employees and their families in addition to foreign workers. It is noteworthy that the Saudi government has allocated SR61.2 billion in its 2010 budget for health and social development services, including establishing eight new hospitals and a number of primary health care centers across the Kingdom, in addition to developing the infrastructure of 19 hospitals. ACE Continues to Work in Saudi Arabia glass insurance, machinery and equipment insurance, loss of profits (machinery disruption) insurance, business interruption insurance, ground transportation (open coverage), ground transportation (one shipment), maritime transport insurance (open coverage), shipping (one shipment), hull insurance, carrier s liability insurance and comprehensive property insurance. Arab Insurance Companies Regain Balance which amounted to $15.88 billion against $12.51 billion in 2008, with an increase of 26.8 percent. Gulf insurance also seized the top ten ranks among the the first four adopted criteria. The total value of the capitalization for insurance companies, according to collected statistics of 111 companies in terms of market capitalization, premiums, assets and profits amounted to $18.69 billion against $15.54 billion in 2008, with an increase of 20.2 percent. News Nevertheless, insurance companies did not reach the record level in 2007 of $21.8 billion, despite the inclusion of new companies. The total premiums of listed insurance companies reached $8.7 billion against $6.9 billion in 2008; an increase of about 26 percent. The Company for Cooperative Insurance (Tawuniya) occupied for the second consecutive year the first ranking in terms of premiums, followed by Oman Insurance and Qatar Insurance. 8 Shawwal 1431 October 2010 COOPERATIVE HEALTH INSURANCE 9

6 News Mediterranean Insurance Meet Calls for Integration of Insurance Firms The fourth insurance conference for the Mediterranean countries, which include 80 million consumers, concluded its meeting in Beirut last month with new recommendations designed to enhance the performance of insurance firms. Participants called for integration between all insurance firms in the Mediterranean and Arab states. They demanded that more attention be given to high international calibre and the setting up of specialized insurance schools and institutions. Among the recommendations at the conference were the need to spread insurance awareness, promote insurance products that are developed locally and internationally, and meet international quality standards. The participants stressed for the establishment of a Mediterranean investment fund to provide financial support for the expansion activities of domestic insurance companies. Participants said that Mediterranean countries and Arab countries should benefit from the integration between the insurance companies, develop and rehabilitate human resources, and exchange employment and young and technically qualified cadres between different sectors in the region. That, in addition to funding research and studies in the field of insurance in order to contribute to the economic growth in these states, support trade missions across the border, and facilitate access to funds to insurance companies in light of the liberalization trend locally and globally. Fared Shaded, chairman of founder of Shaded Capital, underlined the need for integration between the Mediterranean and Arab insurance companies and its advantages in terms of cost, timing, learning, arbitration and diversity, pointing out to major challenges facing the sector culturally, commercially, technically, politically and socially. He noted that overcoming these obstacles would increase both market size and financial flows. The future is for big insurance groups. In the Mediterranean region, insurance companies need to integrate so as to be able to compete globally. In the absence of funds we need to have new legislations and laws, and we have to exert pressure on legislators in the region, Shaded said to Al-Sharq Al-Awsat newspaper. The absence of harmony and integration between insurance companies and countries in the region, however, could impede the process of integration and weaken competition. Abdalkhalq Raouf Khalil, Secretary General of the Arab Insurance Federation, noted that insurance premiums worldwide had fallen in 2009 by 1.1 percent, while life insurance premiums have declined by about 2 percent because of the global financial crisis. He said that there are positive elements that will increase demand for insurance. Among these elements are rapid population growth, which requires continuous development of infrastructure, privatization of government assets, introducing new insurance laws, as majority of the people are uncovered, the spread of insurance awareness, in addition to the contribution of takaful products in the promotion of insurance services to meet social needs. SAICO Gets SAMA Approval The Saudi Arabian Cooperative Insurance Company (SAICO) has recently got the approval of SAMA to market its medical errors insurance products, according to SAMA letter number 1891/IS dated 24/10/1431AH corresponding to 10 March, Thus, the number of approved products, final and temporary, are 38, according to the report. 10 Shawwal 1431 October 2010

7 In the Spotlight Solidarity Saudi Takaful Company (SSTC) Toward best global standard in insurance sector Solidarity Saudi Takaful Company (SSTC) was established as a joint stock company by the Royal Decree No. M/17 dated 20/3/1430H and a ministerial decision No. 83 dated 19/3/1430H corresponding to 15 March, The company has a paid up capital of SR555 million divided with a nominal value of SR10 per share. SSTC acquired a legal status after it offered an IPO for 22.2 million shares and the issuance of decree of the Minister of Trade and Industry (ministerial decision) announcing its establishment, its memorandum of association and its foundation charter in official newspapers in addition to the issuance of its commercial registration. The company s headquarters are in Riyadh and has branches in Jeddah and Al-Khobar. Vision and Mission The company aims to be a leader in the insurance industry and the best in the region in providing protection to its customers by applying international standards in the insurance sector. It strives to provide insurance solutions and distinctive insurance services in accordance with Shariah and risk management principals. General Strategy Though the insurance industry in Saudi Arabia is relatively new compared to that of other countries, it has grown steadily in the recent years and is now considered a major part of the national economy. The sector is expected to continue growth and expand significantly in the coming years. The new legislations set by the Saudi Arabian Monetary Agency (SAMA) regulating and supervising the activities of insurance companies have played an important role in organizing the sector and building a solid base for a national insurance industry. SSTC seeks to promote the insurance sector in the Kingdom. Because it understands the vital role of the insurance industry in enhancing the national economy, the company strives to develop distinguished insurance products that commensurate with the requirements of the Saudi market and answer the customers needs and demands. It works hard to manage possible risks by analyzing technical factors and providing technical support, in addition to enhancing customer confidence. SSTC strives to fulfill its promises, attract best personnel and maintain the highest standards of efficiency. Moreover, the company looks forward to play a role in training and qualifying young Saudis to work in the various fields of insurance, SSTC aims to be a leader in the insurance industry and the best in the region in providing protection to its customers. and prepare them scientifically and technically so that they have an important function in the future of the Kingdom s insurance sector. One of SSTC s strategies that aims to reach the largest segment of customers focuses on establishing new branches and offices in various regions of the Kingdom in order to communicate directly with customers and provide insurance services, as well as to deal with licensed and accredited insurance brokers, applying the latest and modern means of communications. Shariah Board SSTC formed a Shariah Board, consisting of leading names known for their expertise and competence in Shariah and economy. The board has prepared many studies on Islamic financial transactions, such as Islamic banks, cooperative insurance and Takaful, in cooperation with local, regional and global Shariah boards. The board now directs the company towards a full Shariah commitment in all its offerings and services. Competitive Advantages 1- Large capital SSTC is one of the major contributors in the insurance sector with capital up to SR555 million. Many business leaders have contributed 12 Shawwal 1431 October 2010 COOPERATIVE HEALTH INSURANCE 13

8 In the Spotlight to its foundation, in addition to support from Solidarity Bahrain. The importance of large capital lies in providing financial solvency in the insurance market and the ability to deal with all insurance businesses and big insurance contracts. 2- Strategic partnership Having Solidarity Bahrain, one of the largest Takaful companies in the world, as one of the main investors in the company provided significant technical support to SSTC. The participation of the founding fathers, mostly Saudis, who represent different companies and institutions in the Kingdom and offer a wide variety of expertise, means trust. After the founding of SSTC, Bahrain Solidarity became a strategic ally and a party in Technical Assistance and Services Convention after obtaining the approval of the Constituent Assembly of the company and the Saudi Arabian Monetary Agency. Determining the details of the Technical Assistance and Services agreement, including the duration of the contract, renewal for a period or other periods, etc. is the responsibility of the Board of Directors, which has the freedom to make the necessary decisions in the interest of the company and its partners. 3-Experienced management The management of SSTC has ample expertise and characteristic administrative and technical capacity in the insurance sector. The company believes that the human element is the most important part of the insurance industry and the reason behind growth and progress, and that investing in this key element is the basis for success. 4- Wide geographical coverage The company has offices in major areas in the Kingdom so as to reach all its customers, providing them with an ease in obtaining insurance services. SSTC intends to further expand in the market, a goal that is clearly reflected in its future plans. 5- High quality reinsurance programs The company has signed a number of agreements with major international and regional reinsurance companies that have great reputation and high solvency as these agreements represent a major part of risk management insurance. 6-Sophisticated information systems Modern information systems are essential in the insurance business, which is why SSTC uses the best and the latest information systems to manage insurance contracts and customer service in style. Services and Products SSTC offers a variety of insurance products approved by SAMA which meet its customers needs in the following categories: 1 - Accident and Liability Insurance: A - Personal accident insurance: This insurance covers personal accidents individual and collective in case of death, injury or disability caused by an external violent incident. B - Work injury insurance: This insurance covers the employer s responsibility for compensation in case of physical injury or death due to work-related accident. C - Liability Insurance: This insurance covers the legal consequences of civil liability by a third party in case of material or physical damage that may occur to them, for which the insurer is responsible. D- Public liability insurance: This insurance covers civil liability, including compensation the insurer has to pay to others because of an accident, property damage because of neglect or defects in the property or its products or because of errors of the profession. E Products liability insurance: This insurance covers the compensation the insurer has to pay to third parties because of physical or material damage on a third party to which the retail product was supplied, distributed, transferred, made, amended, or reformed by the insurer. F- Medical liability insurance: This insurance covers medical errors of doctors or nurses or anyone who works in a medical facility. G- Professional liability insurance: This insurance covers the responsibility of the insured toward a third party due to negligence and unintentional error. H- Insurance against theft and robbery: This insurance covers theft, including loss or damage to insured funds because of a crime of theft. I- Dishonesty insurance: This insurance covers loss involving money, securities and other property committed by the fraudulent act of any employee. J Cash insurance: This insurance covers cash, including compensation for the loss of money belonging to the insurer because of fire, lightning, or theft during transferring the money or while it is in safe coffers. K - Other insurance services 2 - Vehicle Insurance This insurance covers losses and responsibilities relating to motor vehicles (does not include transported cargo): A - Insurance against third party liability: This type of insurance covers damages and injuries that may affect a third party caused by the insured s vehicle. B - Comprehensive insurance on vehicles: This type of insurance covers the damage of the vehicle or damage caused by a third party; it also covers vehicles against theft or damage caused by natural factors such as storms, floods and cold. 3 - Property Insurance This type of insurance covers losses The company formed a Shariah Board, consisting of leading names known for their expertise and competence in Shariah laws and economy. resulting from: fire, theft, explosions, natural disasters, disturbances and any other insurance that falls within this category. 4 - Marine Insurance This type of insurance covers two major types of marine insurance: insurance of goods transported by sea, insurance on ships and possible dangers. 5 - Aviation Insurance This type of insurance covers aircraft hull and responsibility towards passengers and goods transported by air, and any other insurance that falls within this category. 6- Energy Insurance This type of insurance covers oil installations and petrochemical facilities and other energy facilities, and any other insurance that falls within this category. 7 - Engineering Insurance This type of insurance covers contractors, installation and construction risks, electrical and electronic risks, machinery damage and any other insurance that falls within this category. 8 - Health Insurance This type of insurance covers the costs of medicines, medical devices and medical supplies and treatment and management of medical claims. 9 - Insurance Protection This type of insurance covers operations that result in death or permanent/ partial disability. 10 Other services A - Commercial & Export Credit Insurance B - Emergency travel insurance 11 Reinsurance The company can accept optional reinsurance operations only from local companies registered in the Kingdom or in the Gulf in a manner that is in accordance with the SAMA guidelines. 14 Shawwal 1431 October 2010 COOPERATIVE HEALTH INSURANCE 15

9 Snippets Restart the Wife, Delete the Mother-in-law 90 cm hair insured for $1m German journalist Bernd Oolrman and his wife recently published a book called Pain at Each Step, which included excerpts of the funniest messages received by German insurance companies during the year. In one letter, where a customer has some issues with his insurance company over his mother-in-law, he writes: I attach with my letter a photo of my mother-inlaw, please delete immediately after use. Another customer, confused between his car and wife, asked his insurance company to, extend his contract and restart my wife! A third person called his insurance company to ask for the value of his wife s life insurance, but failed to prove that she is dead because there is no body. When the company refused to pay him, he wrote to them saying, I ask you to agree to pay the life insurance of my wife, I found her under the bed, she is dead. And then a story about a policeman who accused a driver of running over a man and causing him physical harm, without offering him any help. The driver wrote to his insurance company saying: I never ran over somebody and did not offer help, things always happened the other way round, I am the one who always goes to the hospital. A wife wrote to her health insurance company saying: The life of my wounded husband is in immediate danger because one of the doctors wants to scan him under the scanner. A Valentine gift gone wrong It must have seemed like an expensive gift that would make his wife the proudest thing on the road, only had it not ended up becoming a burden. Ian Grice paid 30,000 for a chrome-plated Mini Cooper as a Valentine s gift for his wife Toni. But to the couple s dismay, they couldn t even for once take their new car on a drive. Mr. Grice, 42, could not get anyone to insure the pricey vehicle. I have been left with the world s most expensive mirror, he complained. No one will touch it with a barge pole. At a time when people struggle to insure their cars, properties or life, a cosmetic company has insured football player Troy Polamalu s hair (90 cm) for $1 million. Troy s long hair is considered fashionable, particularly because football players generally do not grow their hair. Polamalu, 29, is Samoan by descent and says he has not cut his hair since German MP: Fat people must pay more A conservative member of Germany s parliament wants overweight people to pay more for healthcare insurance, arguing that their unhealthy lifestyle is putting too much of a strain on hospitals. Marco Wanderwitz, a member of Chancellor Angela Merkel s Christian Democrats (CDU), told Bild newspaper it was not fair for those leading healthier lives to have to pay for those who raised healthcare costs by being overweight. It s legitimate to ask the question if the immense costs that are caused by the excessive consumption of food should continue to be paid for by everyone else, Wanderwitz said, referring to an estimated nine million overweight Germans. No hubbly bubbly for nervous wife A newlywed couple in Amman asked their hotel staff to provide them with a hubbly bubbly in their room, apparently the bride s wish. The groom approached a female receptionist and tried to persuade her how important it is for him to fulfil his bride s request. He told her: My wife is very nervous and she could become really depressed if she didn t smoke a hubbly bubbly. Please do this, I am ready to pay the amount of money you want, please just do it. But sadly, all his attempts were in vain, and the hotel management responded, saying: We apologize for that, but such requests cannot be delivered. 16 Shawwal 1431 October 2010 COOPERATIVE HEALTH INSURANCE 17

10 Hot Topic Claims Management Companies Between the hammer and the anvil Claims management companies play an important role in the insurance sector, especially because they are the link between insurance companies and insurers. The presence of such companies has become a necessity in light of the significant decline in their numbers in the Saudi market. Claiming the rights of health insurers is one of the most prominent tasks of claims management companies, particularly after the introduction of mandatory health insurance for workers in the private sector, which includes both citizens and residents of Saudi Arabia. But are claims management companies doing their job as they should? And what are the issues they have to deal with on a regular basis? This report answers all these questions and more. Effective claims management is indispensable in order to ensure that policyholders do not violate insurance contract payment terms. Claims management also helps an insurer detect, appraise and monitor financial risks in operating activities. Anwar Manae, personnel director at MedNet, a claims management company, gives an insight into the kind of claims his company deals with. We consider ourselves a link between insurance companies and service providers hospitals and treatment centers. We deal with the administrative and medical issues of each patient individually, he said, adding: As a third party, we manage medical policies, deliver new and renewed policies that enable insurers to benefit from the service provided by a hospital or a medical center. We also ensure that all the bills are settled during the period allowed by the Council of Cooperative Health Insurance, and obtain medical clearance prior to completion of the insured s treatment. Hassan Abdul Bari, Director of Medical Department at Saudi Arabian Cooperative Insurance (SAICO), notes that the system states that prior approvals are not required for emergencies, citing the existence of such approvals as a way to prevent hospitals from offering too many services without medical justification An emergency is a condition that requires medical intervention to save the life of the patient; these conditions not only include bleeding, burns or car accidents, but there are other cases within the same range, such as, cramps, fever and other complications, Abdul Bari said. Importance of Claims Management Companies When should insurers seek the help of a claims management company? Experts point out that according Manae : We have special computer programs designed to obtain the most accurate information and reports upon request. to the new document issued by the Council of Cooperative Health Insurance Council, which identifies medical coverage, insurers should seek the help of a claims management company when he/she encounters any problems with the service providers. At this point, the claims management company tries to solve the problem with the service provider so that the beneficiary is receiving all his/ her rights. Claims companies are also responsible for obtaining medical approvals from insurance companies; although many consider that it is the insured s duty to do the follow-ups. The time needed to issue a medical approval should not exceed 60 minutes, as directed by the Council of Cooperative Health Insurance, which states that approvals should be cleared within 60 minutes at most, or the claim will be implicitly approved. Statistics and Programs Manae explains that MedNet has special computer programs designed to obtain the most accurate information and reports upon request including statistics programs that were developed by MedNet International and are used in all the company s branches around the world. Asked about the number of approval requests SAICO receives on a daily basis, Abdul Bari said: We receive around 800 medical conditions that need approvals, but most of these conditions are uncovered by the insurance policy, so we approve 50 percent of these only, nearly 400 cases. This, he added, is because many of these conditions are not covered by the insurance company and so they do not require approval. Some cases don t require the approval of claims section, such as emergency situations, which cannot be delayed. Key Employee Qualities Highlighting the key qualities that should be possessed by employees working in claims management companies, Manae said: Most of the employees of these companies are university graduates and academics. We at MedNet support Saudi cadres and provide them with the needed training so as to be active in the Saudi labor market, especially in the insurance field. Abdul Bari said that employees in the claims management department must be medically qualified and able to combine academic and professional experience. We hire doctors, pharmacists, nurses, and medical analysis experts so that they are able to understand the medical terminology. Major Obstacles Manae notes that Saudi society is still unaware of the importance of the insurance sector. While some do understand the benefits of an insurance policy, others misuse their policies, and the rest are oblivion of 18 Shawwal 1431 October 2010 COOPERATIVE HEALTH INSURANCE 19

11 Hot Topic Medical Conditions That Do Not Require Prior Approval First: class VIP+ and VIP do not require prior approval, except in the following cases: - Entry and hypnosis - Treatments costing up to SR Dental and optical services Abdul Bari: We receive around 800 medical conditions that need approvals, but we approve only around 400 of them. their rights and duties. The solution lies in initiating awareness campaigns by insurance companies to educate the beneficiaries on the importance of insurance, he suggests. Abdul Bari confirms that there are many cases of manipulation and exaggeration by some medical departments, doctors and medical workers to obtain approvals of medical insurance for cases excluded by the Council of Cooperative Health Insurance. Many do not know the rules and regulations set by the council, and some workers in medical centers are unable to distinguish between what requires medical clearance and what does not. Therefore, we receive many medical documents (through fax) that do not require prior approvals, causing delay in providing medical service, and ultimately, giving an unreal image of insurance companies, he said. Abdul Bari blames hospitals that suffer from a shortage of qualified personnel for making things difficult. He calls upon the concerned authorities and those responsible for recruitment in these hospitals to exercise precision and caution in selecting individuals, and asks them to subject their employees to training courses in order to achieve the greatest proportion of credibility and professionalism. Few companies approve medical claims within the 60 minutes period set by the Council concerning approvals because some approvals need a medical report from the doctor. All parties should bear the responsibility for delays, he added. Health Insurance System Manae said MedNet started operating in the Saudi market 15 years ago, and that there are many differences between then and now, especially after the issuance of the cooperative health insurance law. The presence of the Council of Cooperative Health Insurance as a lawmaker and an observer of the insurance companies helped companies look more professional and in developing rules and principles that protect all parties. Shortage of Employees Manae attributed the shortage of qualified employees in the insurance field to the requirements established by the legislature as few health insurance claims companies have Official from Sanad: The shortage of employees is due to the lack of qualified specialists, which has resulted in the reduction of the number of claims management companies. been able to meet these conditions, and thus able to continue operating in the Saudi market. An official from Sanad Insurance & Reinsurance Cooperative Company, who requested anonymity, confirmed that the shortage of employees is due to the lack of qualified specialists, which has resulted in the reduction of the number of claims management companies. This in turn led many insurance companies to start processing the claims internally. We at Sanad do not support outsourcing and rather prefer to handle insurance claims internally, he added. Abdul Bari said that the dearth of qualified staff possessing competence and experience in this area is related to the fact that insurance companies do not like to deal with claims management companies and prefer to create their own claims departments. Outlook for the Future In what is clearly a pioneering step, Abdul Bari announced that SAICO Second: class (A+, A, B, and C): - Entry and admissions in the hospital - MRI, CT scan and X-rays - Physical therapy sessions after the first session. - Biopsies - Nerve conduction - Heart tests (ECG) and heart operations - Gallstone fragmentation - External surgeries - Medicines for more than one month -Medical conditions that cost more than the specified are as follows: - (A) SR1000, (B) SR750, (C) SR500 - Dental and optical services - First Pregnancy and last visit is currently working on a new and distinct initiative, which is to hire female specialists as delegates to insurance companies to provide the best medical services for large hospitals and treatment centers. These delegates will help provide, coordinate and facilitate online services in these facilities; which will eventually help insurers get the required approval quickly and easily, he explained. 20 Shawwal 1431 October 2010 COOPERATIVE HEALTH INSURANCE 21

12 Social Responsibility Dallah Hospital: Decades of leadership in social responsibility Since it was established in 1987, Dallah Hospital, under the parent company (Dallah Al- Baraka) strived to provide community services and social programs including the pioneer program Life Makers in 2001, which offered scholarships for outstanding female students of Dar Al-Hekma. The hospital was a pioneer in launching innovative programs such as the opening of Jeddah Centre for Science and Technology in the mid-eighties, and the launch of Iqra TV channel and other programs that made a quantum leap in the life of individuals and society at large. Today, Dallah Al-Baraka continues what it had started by launching new strategic projects to benefit Saudi society. These include: encouraging scientific research, raise awareness of social and economic cooperation with government facilities, benefiting from the experiences and services of national and international organizations in the areas of community service, etc. In this report, we ask Ahmed Babair, Executive Director of the Dallah Hospital, Riyadh, about the hospital, its future programs and medical services. Dallah Hospital strongly believes that social responsibility programs are an effective way to help society, in addition to providing best medical services, which are in line with international standards. The hospital strives to provide comprehensive training to Saudi medical and administrative staff by offering educational health programs and supporting scientific and social activities such as conferences, lectures, exhibitions, celebrations and more. We have unlimited commitment to social responsibility programs as part of our strategy for the hospital, said Ahmed Babair, Executive Director of Dallah Hospital in Riyadh. We work hard to achieve our goals and to provide new opportunities for social action in light of the technical and telecommunications developments in the social work field. For example, we deduct a percentage from the salary of our employees, who wish to contribute or help the Association for Children with a Disability, he said. Essential Programs The Patient and Family Teaching Center, Community Awareness Services and the National Institute for Specialist Medical Training, are some of the most important social responsibility programs offered by Dallah Hospital. Our Patient and Family Teaching Center offers a special educational service for patients and families. The center provides patients and families with educational tools to know how to live with certain medical conditions and learn more about the proper use of medication, drug or food interaction among other services. This is done by allowing patients to meet with medical experts or attend related lectures and seminars, in addition to giving them brochures and useful publications, explained Babair. The National Institute for Specialist Medical Training is a non-profit establishment and subsidiary of Dallah Company for Health Services. It was established in collaboration with the Loma Linda University to bridge the gap in the labor market in certain health disciplines such as respiratory therapists and others. Among our social responsibility programs, we support the Down s syndrome (DSCA) Charity, and Disabilities Charity by providing free services (follow-up programs for pregnancy and birth) and offer special discounts for its employees, added Babair. Recently, we sponsored the first media campaign for Ensan, the Saudi charity committee for orphans care, which included publicizing the charity and its activities, he said. Moreover, the hospital has participated in organizing advertising campaigns to promote Dallah Hospital opened in 1987 to become one of the largest private hospitals in Saudi Arabia with a capacity of up to 370 beds. We introduced a program to deduct a percentage from the salary of our employees who wish to contribute or help the Association for Children with a Disability. the activities of Prince Fahd Bin Salman Charity Association for Renal Failure Patients and has launched national autism awareness campaigns and training courses. Dallah Hospital has also collaborated with the National College for the Training of Health Professionals (non-profit) to provide training for their employees. It has also sponsored activities in Riyadh, such as celebrations of Eid Al-Fitr and the first meeting of heads of municipal councils. We organize medical awareness days and weeks at the hospital, which include lectures, exhibitions and a variety of other programs, and have sponsored social activities, such as, holiday celebrations and Holy Qur an competitions, in some regions. All praise be to God, all of these programs received positive feedback, said Babair. Beginnings and medical services Dallah Hospital is a major investment of the Dallah Company for Health Services, which was established to provide quality services in line with global standards to suit the unique environment of the Kingdom. Dallah Hospital opened in 1987 to become one of the largest private hospitals in Saudi Arabia with a capacity of up to 370 beds. According to Babair, the hospital has gone through several stages of development, expansion and growth technically and professionally. In 2008, we launched a maternity hospital for women, which has a capacity of 90 beds and 17 outpatient clinics, he said. Today, Dallah Hospital, which employs over 1700 employees, takes great interest in supporting qualified national expertise, and has appointed the best professors and physicians from different Saudi universities to its advisory and administrative boards. In terms of technology, the hospital has been eager to benefit from successful experiences in the field of technology, and to start from where others left off, i.e. Dallah Hospital was the first hospital to use laparoscopic surgery in the Kingdom. The hospital now has the best information management systems and the latest electronic archiving system for X-rays (PACS), which is one of the latest scientific techniques in this area, in addition to diagnostic equipments such as computed tomography and cardiac catheterization. At the level of health services, we have won recognition from major organizations specializing in this field, namely, the Joint Commission International (JCI), as well as the ISO, noted Babair, adding Our centers cover almost all major and sub- specialties. Dallah Hospital has launched many pioneering centers including the Women s Pregnancy Hospital Reproduction Center, Center for Medicine and Cardiac Surgery, Center for Medicine and Neurosurgery, Children s Center and Center for Endocrine Surgery, in addition to general and specialized departments and dermatology and mental health departments. Our Children s Center provides specialties in paediatrics, such as the heart, ear, nose and throat and chest surgery. The hospital also features one of the largest centers specialized in clinical emergency with a capacity of approximately 45 beds, including a children s emergency center and an obstetrics and gynaecology emergency center, Babair said. Dallah Hospital has a track record of several achievements. Some of the most notable ones are: The first private hospital to launch a specialized center for heart surgery and treatment in Riyadh. The first private and public hospital to launch a laparoscopic center. The first private hospital to have a center licensed by the Ministry of Health for the treatment of infertility and reproduction. The first hospital to use electrical stimulation techniques to treat infertility and disabilities in the Kingdom. The first private hospital to open obstetrics and gynaecology training center, which is accredited by the Saudi Council for Health Specialties. The first private hospital to obtain a license from King Abdulaziz City for Science and Technology to handle radioactive materials used in nuclear medicine. 22 Shawwal 1431 October 2010 COOPERATIVE HEALTH INSURANCE 23

13 Cover Story Mandatory Health Insurance for Citizens in Private Sector: Conflicting Perspectives The Council of Cooperative Health Insurance (CCHI) in its recent meeting held on July 5, 2010, made a very important announcement that would affect a large segment of Saudi citizens working in the private sector. The announcement mandated the owners of private companies and institutions to cover Saudi nationals and their families working in the private sector under the mandatory cooperative health insurance. In this report, we throw some light on the importance of this announcement and its impact on Saudi private institutions and insurance companies. I have medical insurance, but my insurance policy covers few medical services and so I can hardly benefit from it, said Yazed Al- Shemari, a security employee who works in a construction company in Riyadh. For example, most of the nearby hospitals are not covered in my policy, that s why I prefer to go to public hospitals, where I receive better services and medical care than those specified under the insurance policy provided by my company. Raed Anzi, a friend of Al- Shemari, who worked in a service company, said that his problem is bigger than Al-Shemari s. When the Council issued its resolution compelling private companies to cover their employees, my former account manager informed me that the company would deduct SR200 from my salary for insurance. When I refused, because I cannot afford such deduction, the account manager said, It s not your choice, we will deduct the amount whether you like it or not. That s when I decided to leave the company. Thankfully, I found a new job and my present company has provided me with excellent medical insurance without deducting any amount from my salary. Muhammad Alfaifi, an employee in a big private company, is luckier than both of them. I have full health insurance coverage, and my company never deducted any amount from my salary for the health services I receive. My insurance policy is good; it covers almost everything, although I have to pay for medication every time I visit a new doctor, Alfaifi said. Agreeing with him is Saud Al-Hajri, an accountant in a legal advisory office, who notes: I am working with my company for three years now and I have excellent health coverage. My contract had a clause Tariq Al-Mutawa: daily we receive a number of complaints and inquiries from citizens and employers asking about the insurance coverage. in it stating that I am entitled for insurance coverage, and my company was committed. I believe that mandatory health insurance is everyone s right. Naef Al-Shamri, an administrative officer in a private company, says that he did not pay attention to the quality of the insurance policy provided by his company. My father works in the military; and that is why my brothers and I can go to military hospitals, which offer excellent medical care, much better than those provided by private or public hospitals. I cannot assess the level of medical insurance provided by my company since I joined them only three months ago and until now, have not visited any of their hospitals or medical centers. CCHI Satisfied The CCHI is greatly satisfied with the implementation of mandatory health insurance. The Council is very satisfied after the implementation of mandatory health insurance for Saudis working in the private sector and members of their families, said Tariq Al-Mutawa, Director of Rehabilitation at the Council. Although there are some obstacles, the Council is working hard to overcome them, he added. To achieve the maximum benefit from this resolution, we need to strengthen cooperation between all parties. This does not mean that no one is complaining; daily we receive a number of complaints and inquiries from citizens and employers asking about the insurance coverage, how to implement the resolution and who should or should not benefit from it. Asked about penalties on companies that fail to cover their employees, Al-Mutawa said: After we have found out the companies that do not commit to mandatory insurance, we send them a warning. If they continue to ignore their responsibilities, we talk to the labor office, which will impose the necessary sanctions. Usually, the labor office imposes a financial penalty on the facility and stops its operations until it abides by the regulations. Al-Mutawa denied that some insurance companies have refused to cover Saudis. The Council ensures that health insurance covers all groups identified by the system including Saudi nationals and residents working in the private sector. We have not received any complaints stating that a qualified insurance company has refused to cover Saudis. Moreover, insurance companies have no right whatsoever to refuse, they should abide by the law. 24 Shawwal 1431 October 2010 COOPERATIVE HEALTH INSURANCE 25

14 Cover Story Commenting on the possibility of applying mandatory health insurance on employees working in the public sector, Al-Mutawa said: The application of the cooperative health insurance system is done in stages. It started with residents working in companies with over 500 workers, and then it was applied on more companies with fewer employees. Recently, it has been applied on Saudis working in the private sector and we are studying the possibility of applying it to other categories in the near future. Addressing Complaints Commenting on the contentious relationship between citizens working in the private sector, employers and service providers, Shaya Al- Shaya: A good number of complaints are related to the refusal of the employer and the insurance company to cancel the insurance polices. Shaya Al- Shaya, Director of Irregularities and Complaints at the CCHI, said: The Council is keen on the success of this relationship and that is why we have established the Irregularities and Complaints Department to deal with and receive complaints and examine irregularities, if any, and take the necessary action. He added that the department receives complaints on their website over the phone and toll-free number , or by fax (No: /01). We sometimes receive complaints during the supervision and control field visits carried out by the Council secretariat, Al- Shaya notes. One of the common irregularities people complain related to insurance coverage is unresolved financial claims. We also receive complaints from employees and employers, who are not satisfied with the customer service centers in insurance companies or the poorly qualified reception staff at some service providers, he added. There are also complaints about the blocking of some specified benefits by employers with the approval of insurance companies as in cases of pregnancy, childbirth, dental and physiotherapy. A good number of complaints are also related to the refusal of the employer and the insurance company to cancel the insurance polices, the delay in sending the insured s information to the national authority, the delay in clearing medical claims by insurance companies and the refusal of some companies to cover Saudi employees, especially dependents. According to Al-Shaya, Many are unaware of the mechanism of cancellation of an insurance policy in case of death, transfer of sponsorship, securing alternative insurance with another company, and resignation. Business Owners S. A., a chief financial officer at a private company, who requested anonymity, said that mandating private companies to provide medical insurance for their Saudi employees is a move in the right direction. Some Saudi citizens are delighted with the new system as it will provide them with all the needed medical services, while others see it as a great alterative to public services. Strangely though, some Saudis refused to register their names with insurance companies, without specifying any good reasons, said S.A., while adding: In general, some companies were negatively affected by the resolution as it added an additional financial burden on them, while others were excited about it. Insurance Companies Asked about the repercussions of this resolution for insurance companies, Abdullah Ajlan, Director of Health Insurance Department at Malath Cooperative Insurance and Reinsurance, said, Even before the application of the mandatory heath insurance system, almost all big companies insured their Saudi employees and their families. The medium-sized companies began covering their Saudi employees and their families after the application of mandatory insurance, although some are still covering non-saudis only. Meanwhile, small companies used to buy insurance in order to facilitate procedures with the labor offices and passport departments and they rarely covered Saudi employees, he added. In the last couple of years though, many companies have become more aware of the importance of insurance and some are even demanding for quality services, considering it as a priority, as opposed to the price of the service, which was earlier the main determining factor in their decisions to insure their employees. Mohamed: I am satisfied by the service i get. Ajlan noted that all insurance companies accept to cover Saudis and non-saudis working in companies, institutions and big companies, however, individual and family insurance is largely refused. Individuals usually apply for insurance only if they are to undergo a surgery or when the treatment is very expensive. Our customer services department receives calls from people requesting insurance for their pregnant wives, etc., but after the application of mandatory insurance, everything has changed. Ghassan Abdel Halim, Director of Medical Insurance in the Arabian Shield Cooperative Insurance, talks about the impact of such an obligation on the growth of insurance companies. He explains: As far as our company is concerned, I have not seen a major change in terms of witnessing a growing demand from private companies to insure their employees. Most of our clients are already providing medical insurance to Saudi citizens, much before there was a binding resolution. Commenting on the widespread rumour that some insurance companies are refusing to insure Saudis, Abdel Halim said: I have been working in this field for years, and I never heard of an insurance company that refused to insure a Saudi, because this is a clear violation, and such companies will be held accountable. Maybe some private companies are trying to postpone the application of health insurance pretending that they could not find a suitable insurance company. I understand that some private companies may shy away from insuring employees with big families because of the high cost of insurance or because an employee wants to be covered under a different category that may not commensurate with his professional experience or degree. Such differences could be the reason behind the rumour, he said. 26 Shawwal 1431 October 2010 COOPERATIVE HEALTH INSURANCE 27

15 Interview Dr. Musaed bin Mohammed bin Saleh Al-Salman is the Dean of the Faculty of Medicine at King Saud University, University Hospitals Supervisor, and the representative of the university health sector at the Council of Cooperative Health Insurance. We met with him this month to discuss a number of issues related to the performance of the Council and the role of the university hospitals in supporting the health insurance sector. We also asked him about the shortage of medical staff and the level of medical services provided by hospitals, in addition to discussing the role of Saudi universities in carrying out medical studies and researches. Dr. Musaed Al-Salman, Dean of the Faculty of Medicine at King Saud University, and University Hospitals Supervisor King Saud University alone contributes to over 40% of medical studies in KSA You represent the university health sector at the Council of Cooperative Health Insurance (CCHI). Tell us more about this representation and the role of this sector. I share the representation of the Council with other colleagues from the public health sector. The university health sector plays an important role in strengthening the experiences of university hospitals and developing researches and studies for the Saudi health insurance sector. Tell us about the current support of university health sector to research and development activities. We have many scientists who publish their studies in several newspapers. I believe that universities are the ones responsible for leading the research and development activities in the health sector. That is why most of the medical researches and researchers are coming from the universities. It is worth mentioning that King Saud University alone contributes to more than 40 percent of health and medical studies in the Kingdom. How will you rate the performance of the CCHI? The performance of the Council is great; it is walking a steady and balanced pace towards a brighter future. Of course, there are some issues that need to be clearer, especially with regards to insuring Saudi nationals who do not work in the private sector. Do you welcome the idea of university hospitals participating in providing health care services under the insurance contracts concluded by the insurance companies? In principle, yes, I think it is a good idea. But we fear that such a move will increase the burden on university hospitals, which could negatively impact the academic process and medical researches. But with the expected increase and expansions of colleges and universities, I think university hospitals will have a greater participation in insurance contracts. You are the Dean of the Faculty of Medicine at King Saud University. From your experience, what is the difference between university hospitals and government hospitals? What is the number of university hospitals in the Kingdom? In terms of the services, university hospitals offer the same services as those offered by government hospitals. The main difference is that university hospitals serve everyone directly and provide primary, secondary and advanced services. They are an essential part of the educational process for students of Faculty of Medicine and postgraduate studies. As for the number of university hospitals, King Saud University currently has two hospitals with a total of 1,000 beds, and in the next two years, we will have 1950 beds serving Saudi citizens and employees of the university and its branches. King Saud University hospital has a track record of quality achievements. For example, the Intensive Care Unit for Children is the only center outside the United States that is internationally recognized to hold training courses in this specialization. Our thoracic surgery at King Khalid University Hospital occupies the second place in the world, after Canada, in performing a very sophisticated operation that involves removing part of the lung using endoscope. The University has also many professors, who have achieved remarkable global presence, including Dr. Mohsen Al-Tamim, Dr. Adel Al-Muqrin, Dr. Faleh Al-Faleh and Dr. Naeem Al- Rahman. Moreover, our surgeons have successfully conducted many quality and unique operations locally, regionally and internationally, including: fixing the inflation in the arcuate artery using stents without having to open the chest or stop the heart and the circulatory system. They were also able to remove a tumour in the right adrenal gland, in addition to conducting 300 operations using the laser to treat varicose veins. We succeeded in removing a large block of the thyroid gland from the back of the chest through a surgical incision in the neck, in addition to removing the colon and rectum of a 60 yearold patient suffering from a cancerous 28 Shawwal 1431 October 2010 COOPERATIVE HEALTH INSURANCE 29

16 Interview Some issues need to be clear regarding insuring Saudi nationals, who do not work in the private sector. Once the insurance industry develops into a more stable and mature industry, the medical services then should be more specialized. tumour in the rectum using a robot. Our surgeons have cultivated an anal valve for a patient and conducted a rare operation by endoscope on a just-born Saudi infant, and replaced the joint of a shoulder using a new technique. In Riyadh, there are two university hospitals: King Khalid University Hospital and King Abdulaziz University Hospital. Do both offer training for medical students at King Saud University? They both do, and there is no difference between the courses provided by King Khalid University Hospital and King Abdulaziz University Hospital. The establishment of the Faculty of Medicine at the University of King Saud was in the year 1967 by a Royal Decree issued by His Majesty the late King Faisal, and a ministerial decision No. 465, (D/ ). The university opened its doors in 1389H. The University of London helped in selecting the faculty members, and supervised the examinations until the year 1399H. Then, the university signed agreements with different universities in the US, Canada and the UK to support its academic structure, offering medical chairs to train Saudi doctors who graduate from the university and prepare them for postgraduate studies and specialization in various medical fields. In the academic year , the university opened a special section for female students, which was affiliated with the Ministry of Health, to the University of King Saud. In 1395H, the university was renamed to King Abdulaziz University Hospital specialized in training medical students. In 1981 (the twenty-fifth anniversary of the opening of King Saud University), the buildings in the Faculty of Medicine and King Khalid University Hospital were opened at the way to Dir iya creating greater opportunities for both male and female medical students. Where do you agree or disagree with the current practice of health insurance systems in the Kingdom? I believe that the cooperative health insurance is one of the greatest experiments that has been agreed upon in the Kingdom, featuring a health system adopted by the State. We are heading towards a bright future upon completion of the health insurance equation so as to have a comprehensive system for all citizens and residents in the Kingdom. As a doctor, how do you rate the level of medical services provided by hospitals under the umbrella of insurance? I would rate the level of medical services as medium to good. It, however, lacks the accuracy and control to ensure that no one is draining out our citizens or residents; I hope they will change and develop in the future. Are you satisfied with the current insurance coverage? If not, what should be included in the insurance policies? Satisfaction depends on the value of the policy. There is a balance between insurance polices and the provided service at least for now. But once the insurance sector develops into a stable and mature industry, the offered medical services should be more specialized. How do you rate the level of experience of the medical professionals, who graduate from Saudi universities, in general, and King Saud University, in particular? Is it possible to increase the number of graduates to fill the gap between supply and demand? Fortunately, our graduates have all the needed qualities to succeed. Saudi Arabia and King Saud University, in particular, offer the best of medical services in the region, which has contributed to the creation of professional medical cadres and distinct medical institutions, all thanks to the generous support of the Saudi government. During the past years, the Kingdom witnessed a paradigm shift in the health sector including the expansion of hospitals and the opening of new universities and colleges of health to cover all regions across the Kingdom. Saudi Arabia has a record of medical accomplishments. In the next couple of years, as medical schools and health colleges increase in number, we will have enough qualified national cadres to cover the current gaps. Few universities, if any, in the Arab world are known for their medical inventions or discoveries. Why this is so and how are you trying to overcome this in King Saud University? King Saud University takes a genuine interest in developing scientific and research aspects. The university, represented by the Faculty of Medicine and University Hospitals, has cooperated with a number of universities and the world s most prestigious research A brief bio about Dr. Musaed Al-Salman Dr. Musaed Al-Salman is married and has five children (Yara, Madawi, Shaden, Fahed and Saud). In 1413 H and 1418 H, he received the award for the Best Lecturer in the Faculty of Medicine. He has published several research papers in medical journals. In addition to assuming the Deanship of the Faculty of Medicine and supervision of the university hospitals, he represents the Ministry of Higher Education in the Council of Cooperative Health Insurance and is a secretary of the International Association of Heart and Blood Vessels Surgeries/ Middle East and North Africa. He also heads the Standing Committee of Medical Supply at University Hospitals. Dr. Al-Salman is a member of many committees, including: Emergency Medicine and Disaster Committee in the Central region, the HIV Commission, the Committee of Saudi Board in Saudi Authority for Health Specialties, Examination Committee and IT Committee, both at the University. He also represents Saudi Arabia in the Journal of Vascular Surgery Association of Asia (Japan), and is a member of the Disabled Children s Association, and a founding member of the Middle East Journal of Emergency Medicine (Journal of the Medical Tribunal). centers. The product of this cooperation is clear, as we have published many research papers in scientific journals and international periodicals that have received strong resonance in the scientific community. Many studies are still underway confirming the interest of King Saud University in supporting scientific research and expanding research centers. We believe that HR is a critical success factor; therefore, we decided to introduce research chairs, which was a great turning point for the University and contributed to activate the mobility of scientific research. With regard to obstacles facing universities in the Arab world, I think they are primarily financial, and that the availability of funds can help increase research and medical discoveries. The best example is that of King Saud University, where with the availability of the needed funds, the number of researches doubled compared to that in previous years. Tell us more about your recent medical researches. I have authored about 50 research papers, which I presented in a number of international seminars and scientific conferences. These include studies on blood vessels surgeries, carotid arteries diseases, strokes, diabetic foot, and vein diseases. I have also authored several books and translated many others. They can be found on the University Website. What are your hobbies? Reading and walking How do you spend your spare time? I do not get any spare time What is your favourite quote? Too much is as bad as too little, and Science is like light; whoever passes by it gets some. 30 Shawwal 1431 October 2010 COOPERATIVE HEALTH INSURANCE 31

17 Finance and Investment Managing Assets for Insurance Companies: A Great Leap Forward A recent study published by the Saudi Arabian Monetary Agency (SAMA) revealed that the total investments of insurance companies in the Kingdom amounted to SR9,189 million, distributed on the basis of SR3,773 million insured funds and SR5,416 million from shareholders funds. A number of pertinent questions come to mind, such as, legally, what areas and sectors can insurance companies invest their assets in, what are the main limitations and to what extent can the investment of insurance companies help other industries/sectors. This report seeks to answer all of these questions taking into account the current economic and legal developments in the insurance sector and the Kingdom, at large. Abdulrahman Al-Subaihin, CEO of Tawuniya Cooperative Insurance Company, said that in general, insurance companies should have three basic elements before starting any investment: safety, profitability and liquidity. According to him, the Cooperative Insurance s list of regulations contains a table that shows the ratios of assets per vessel divided between general insurance and protection and savings insurance. Investment in deposits at local banks and government bonds are the biggest investment vessels allowed by law. The allowable percentage should not be less than 20 percent for each of these two vessels in relation to general insurance, and 10 percent for protection and savings insurance. The maximum rates of other investment vessels differ, but they are concentrated in Riyal investment funds (10 percent), investment funds in foreign currencies (10 percent), foreign government bonds (5 percent), bonds issued by local companies (5 percent), bonds issued by foreign companies (5 percent) and investment in equities (15 percent). Al-Subaihin adds: The list identifies the rates allowed to invest in real estate sector, property mortgage loans, and loans to policyholders, while investing in other investment vessels shouldn t exceed 15 percent. Abu Bakr Shehab, finance director of Malath Cooperative Insurance and Reinsurance Co., said that the primary goal of any investment is to achieve greater revenue. In light of this, plans for future investment are designed and criteria of choosing the appropriate investment are determined. Any type of investment carries some risks, as the retention of funds in the form of cash is always risky because it depends on the unstable purchasing power of currencies. Having a good investment policy is the secret, as the policy is the authority that governs Al-Subaihin: By allocating funds to settle down financial commitments, insurance companies will be rest assured that they have enough money to cover claims, payments, reserves and expenses. investment operations, manages investment portfolios and funds and identifies future risks, said Shehab. He said investment policies should be in Saudi Riyals with 50 percent of the total available assets, according to the executive regulations of the control system for cooperative insurance companies issued by the Saudi Arabian Monetary Agency. If the agency did not approve the programs offered by insurance companies, they have no choice but to stick to the investment vessels and the proportions shown in Table 1 in the list of regulations, he notes. Insurance companies also need to have a deposit in a local bank for the benefit of SAMA 10 percent of the paid-up capital within three months from the date of granting the license. Investment companies should invest their funds wisely and optimally ensuring conformity with the regulatory terms and meeting the solvency margin requirements (the increase in assets could be converted into cash), added Shehab. Measuring and Managing Investment Risks Safety and risk are the two words most often heard in matters of investment. There is nothing more desired by investors than safety. Therefore, the management of any insurance company tries its best to preserve the invested capital through careful management, prudent follow-ups and cautious tracking of the investment plan s guidelines. In the early years, insurance companies preferred a conservative policy with low risks and high returns. They focused on investment instruments with fixed income, usually offered by government and semi-government bonds, big corporate bonds, banks deposits, in addition to cash, and Maturities & Asset Class diversity. The assets as indicated in SAMA regulations were more important than high returns. Shehab notes that Malath aims 32 Shawwal 1431 October 2010 COOPERATIVE HEALTH INSURANCE 33

18 Finance and Investment to increase revenue, reduce risks that may encounter the investment portfolio and boost profitability by achieving the best returns on investment. He adds: We also try to reduce risks associated with low returns, and focus on investments that generate fixed returns and preserve liquidity as stated in our investment policy. We need to maintain an appropriate amount of liquidity to meet operational requirements, settle due claims, meet financial commitments and provide minimum capital requirements. Asked about the efficiency of the system established by SAMA, Shehab highlights a number of points about asset allocation, which is considered one of the most important items of an investment policy. Asset allocation describes the right distributing methods when it comes to invested or planned funds and identifies the limitations, taking into account - when setting up the structure - the proposed duration of the policy and its objectives. Shehab: The investment policy is the authority that governs investment operations, manages investments portfolios and funds and identifies future risks. Shehab explains: When talking about asset allocation, we should look into the structure of the company and its financial commitments as this will influence the strategic asset allocation in terms of volume, value, duration and currency. Financial commitments or obligations, from Shehab s point of view, mean future claims or unknown operational costs. By allocating funds to settle down financial commitments, insurance companies will be rest assured that they have enough money to cover claims, payments, reserves and expenses, he adds. When asked about the time lag between settling and paying claims and re-obtaining reinsurance, Shehab said, Over a medium term, managing liabilities in the Kingdom takes between 24 and 36 months from the date of issuing an insurance policy. Multi-year documents, such as engineering insurance, could take years. Investment Restrictions Commenting on the list of limitations or restrictions on investments, Al- Subaihin says it mainly relates to investment policy, risks surrounding the company, currency used in the investment, asset allocation and ratios. He said the executive list of regulations obliges insurance companies to analyze and study the possible risks including the market itself, credit risks, fluctuations of interest rate and the area/ sector they will operate on a regular basis. Insurance companies must act appropriately to manage those risks or they will suffer huge losses. Risks increase in the absence of efficient information about the cost of financial commitments, return on assets, currency exchange rates, and liquidity risk in this case, the company will not be able to obtain the necessary funds to pay financial commitments because of the inability to sell financial assets quickly and fairly, explained Al-Subaihin, adding it is therefore very important to maintain sufficient liquidity to meet and manage operating needs, operational risks, states risks, legal risks, technical risks and risks of re-insurance. Moreover, the executive list of regulations ordered insurance companies while setting up their investment policy to make sure that the maturity term of their invested assets meets the company s financial obligations, according to issued documents and programs, as each company must submit a comprehensive investment program for assets allocations to SAMA. The list stipulates that no company may use financial instruments such as derivatives and off-balance sheet items before getting prior written consent from SAMA. Insurance companies may only use these financial instruments for portfolio management. These instruments are also subject to liquefaction in a short SAMA report: Total investments of insurance companies in the Kingdom amounted to SR9,189 million. time, based on assets evaluation, and they have clear pricing information. Insurance companies should have sufficient expenses and assets to meet any sudden financial obligations, said Al-Subaihin. Commenting on the systemic risks that could affect the company s investment returns, Shehab said: Revenues may be adversely affected, from time to time depending on the political or economic changes, within the Kingdom or abroad. These changes include fluctuations in the stock market and international reinsurance markets, changes in exchange rates of foreign currencies, natural disasters, accidents, competition, high claims and lofty administrative expenses and overheads. Overcoming Risks Insurance companies can reduce risks by diversifying their investment portfolio by expanding investment channels and economic activities and identifying correlation coefficient between the different components. That is in addition to signing reinsurance agreements with a distinct local and international reinsurance companies, Shehab advices. He also calls upon insurance companies to conduct reviews of re-insurance programs and identify market trends, while maintaining short-term deposits that can be used for claims payment. Moreover, insurance companies should pursue a balanced offering strategy to create a surplus from insurance operations without the need to increase their market share. They should design the structure of investment to match the maturity, liquidity and operational requirement, while keeping a reasonable rate of cash in their current account or sign overdraft agreements with banks, Shehab said. Bright Future Al-Subaihin expects the size of insurance companies investments in the Kingdom to double during the next five years, especially after they pass the establishment phase and start strengthening their investment activities. I expect that the insurance market will recover quickly in light of its success in overcoming the global crisis, the emergence of rebound economies and the incentives launched by the governments to support their economies and get out of stagnation phase faced by the global economy during 2008, 2009 and 2010, he said, adding, Therefore, investment opportunities will help insurance companies to achieve profitability, which will eventually provide great support for the national economy. Seconding Al- Subaihin, Shehab also believes that the insurance sector of Saudi Arabia will witness growth in the coming years and noted that the application of health insurance system and mandatory vehicle insurance will enhance this growth, supported by increasing economic activity and population growth. The market s confidence will lead to increasing liquidity, which will strengthen the invested assets, and by the will of God, will help provide employment opportunities for male and female citizens. This will also benefit companies related to insurance, such as, insurance brokers, investment management, management of claims settlement, advisory and actuarial services, risk assessors and loss valuers, medical service providers (hospitals and clinics), in addition to marketing and research companies, Shehab concluded. 34 Shawwal 1431 October 2010 COOPERATIVE HEALTH INSURANCE 35

19 Tech World Smile, you re on camera! Google Street View: A history of troubles and privacy issues Google s Street View service, which offers 360-degree images of cities and streets, has been at the center of controversies since its launch in While some experts argue that the feature has helped people find locations and reach their destinations as it provides more detailed information than regular maps others fear that the search engine is invading people s privacy. Google Street View is a Google Maps feature that lets users see images of streets and the surrounding areas, prompting questions about whether it constitutes an invasion of privacy, complaints about inappropriate images, and even a lawsuit. The service was initially launched in five cities around the world, but the number increased gradually to cover more than 40 American cities, including nearby suburbs, and in some cases neighbouring cities. Google dispatched cars and tricycles rigged with cameras, satellitepositioning gear to take pictures of what one might see on streets around the world, and synchronized the images to its free online mapping service. Users can browse these images using the arrow keys on the keyboard or the mouse. Images are displayed in different sizes, directions and perspectives. The service enables users to roam the streets back and forth using the keyboard or mouse to select the horizontal and vertical viewing directions and the zoom level. For example, if you want to visit Trafalgar Square in downtown London, all you need to do is to go to Google Maps and write the name of the arena or zip code in the search box. Within seconds, a map will appear in front of you, allowing you to drag the pegman icon onto the location you want on the map. Google gathers these images by special cameras equipped with 360-degree lenses installed on the roofs of a fleet of cars that roam the streets of cities, and store these images in a database. In Britain alone, Google Street View covers miles of streets and roads. Faces and car number plates are supposed to be blurred out but in some cases are visible. Using cars and tricycles rigged with cameras, Google Street View provides three-dimensional images of cities and streets. Google Street View 36 Shawwal 1431 October 2010 COOPERATIVE HEALTH INSURANCE 37

20 Tech World commercial purposes but also by criminals. Although it is legal to publish photos taken in public places in the United States, unlike other European countries, the service sparked up a storm after Google admitted its Street View cars, which have been cruising and taking photographs of cities, had inadvertently gathered fragments of personal data sent over unsecured Wi- Fi systems. Microsoft has been playing a major role in advancing cloud computing technology. used to sell its software for local computers only, but in light of rising competition, the circle has widened Invasion of privacy Street View images at Google Maps sparked controversy from the outset of the project three years ago. In South Korea, police raided the offices of Google Korea searching for illegal data, while in Germany, many people worried about the erosion of privacy. People complained that faces could be recognized in Google Street View s pictures, raising the potential of them being caught in compromising situations. Others expressed fears that numbers from license plates could be Microsoft offers a similar Street View service but it is less accurate than that of Google. used to figure out who parks or lives on certain streets. Critics say Google Street View service also invites abuse. They argue that thieves could use it to identify targets, security firms could use it to pitch sales, job seekers might find their homes scrutinized by employers and banks could inspect the homes of loan applicants. The fact that Google Street View service displays close images of the streets of San Francisco, New York, Las Vegas, Miami and Denver stirred a close contest between various websites, which competed to show bystanders in embarrassing positions. Although most of the footage did not include anything immoral, viewers could easily identify their friends or relatives in these images. Private data obtained in this way could be used not only for Recently, several ccomplaints were filed against Google s Street View, including by a woman who was for several years moving house to avoid detection from a former violent partner and was extremely distressed when Street View identified her outside her new home. Two colleagues also sued Google over the publishing of their photos in an embarrassing situation that caused humiliation to them and their partners. A number of UK privacy activists have called upon the government to switch off the service claiming that the photos violate privacy. Simon Davies, director of Privacy International, recently said that Street View has caused clear embarrassment and damage to many residents of the UK. The Internet giant offered assurances that adequate safeguards would be put into place adding that it now uses picture-editing software to blur faces and car license plates in a bid to soothe privacy concerns. Google bows to pressure Although the Internet giant has tried to avoid the problems that have trailed its Street View service, it had to bow to US pressure, when it made some adjustments such as erasing the features of streets like Manhattan and New York and that of other famous streets and areas. Google Street View service has helped many by offering more detailed information than that offered by regular maps. After complaints in the US, other countries warned Google that Street View would have to be modified to comply with their stricter privacy laws. To this end, Google has improved facial recognition technology so that it can find faces in images and blur them so that they are unrecognizable. This technology has also been applied to license plates. The blurring feature has since been applied to US Street View imagery in addition to images in other countries where Street View is now available, including in European cities such as Paris, Rome and Milan. Earlier this year, Google finally admitted that it had made a mistake when its Street View cars collected information from unsecured wireless networks prompting scrutiny from data protection officials around the world. Larry Page, one of the founders of Google, apologized for errors in data collection and mapping service, saying: I am sorry; a mistake has been made, according to newspaper reports. Google Street View service, which was launched in the United States, is now available in Japan, Australia, New Zealand, France, Spain and Italy. The service was recently launched in Netherlands and Britain, where Google Maps has pictures of more than 22,000 miles of streets in the UK. It should be noted that publishing pictures of cities, streets and roads on the Internet is not exclusive to only Google. Microsoft, for example, offers a similar service, which, however, is less accurate than that of Google. 38 Shawwal 1431 October 2010 COOPERATIVE HEALTH INSURANCE 39