COOPERATIVE HEALTH INSURANCE October 2009, Issue 7

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1 COOPERATIVE HEALTH INSURANCE October 2009, Issue 7 Al-Sudairy: Our relationship with CCHI is transparent CCHI approved an amended set of by-laws that will affect more than seven million insured Qualified Staff: An urgent need The necessity of training local staff for the insurance sector

2 Editor-in-Chief: Dr. Abdullah Bin Ibrahim Al-Sharif Secretary General of the Council of Cooperative Health Insurance 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: Published on behalf of: The Council of Cooperative Health Insurance Managing Director: Editor-in-Chief: Associate Editor: Editors: Publisher: Rabih Al-Amine Mustafa Shehab Amira Hamadeh Said Al-Hasanieh Group Editor (English) K. Krishnakumar Senior Designer: Hussain Mohamed Al-Bakri Distribution: P.O. Box: Riyadh 11372, Phone: Editor s letter The development of the insurance sector requires the recruitment of hundreds of qualified Saudis. Recent reports indicate the industry s need for staff is urgent, and we hope that soon, qualified Saudi nationals will be able to fill this shortage. In order to increase the number of qualified Saudi candidates for the insurance sector, training institutions and colleges should begin to play a greater role in providing comprehensive training courses for employees and fresh graduates. Some experts are even calling upon decision makers to include insurance in both high school and university curricula, in order to help educate a generation able to meet the growing needs of this important market. I would like to stress my belief that the adoption of a scientific method in managing the insurance sector in general and health insurance in particular will help the sector in performing its important role in society. Improving the insurance sector will also reflect positively on the major investments already made and also the effort to both strengthen the security and social health of Saudi society. In this, the seventh issue of the Cooperative Health Insurance Magazine, our cover story focuses on this shortage of qualified candidates, posing this central question: Who should be responsible for providing the specialized training that is urgently required to meet the needs of or our nation s insurance companies? Our main story explores the impact on the insured and insurance companies after the implementation of the new, amended Cooperative Health Insurance Regulations. While some find in the new amendments an opportunity to expand the scope of healthcare benefits for the insured, others are concerned those same amendments could push up the price of insurance policies, among other related problems. In our qualified companies section, we introduce the Saudi Indian Company for Cooperative Insurance, which offers professional, customized insurance solutions. We also profile the Riyadh Care Hospital, one of the leading private hospitals in the Kingdom and one that is dedicated to extending quality services to patients, in accordance with international standards. Our tourism section visits the beautiful Czech Republic capital of Prague, which is famed for its magical atmosphere, historic architecture, vibrant living culture and great food and drinks. The lifestyle section this issue spotlights the Saudi Arabian date palm industry, which is on a path to becoming an international symbol for the country in the same way chocolate is for Switzerland and cheese is for France. As always, we hope you find the information and topics presented in the magazine useful and insightful. Please enjoy the issue and we look forward to your feedback. Best regards, Dr. Abdullah Al-Sharif Editor-in-chief 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.

3 News 7 Hot Topic 16 Program 38 Finance and Investment 42 Human Rights Assembly demands health insurance for prisoners The Saudi government, under the leadership of the Custodian of the two Holy Mosques, has always given the health sector its highest priority, in order to provide all citizens with an excellent standard of care using the most modern and advanced services available. The marketing of insurance products has become an important priority for the Saudi Arabian insurance sector, which itself has become one of the pillars of the national economy. The Council recently approved an amended set of health insurance bylaw that will affect more than seven million insured Qualified Companies 20 Snippets 24 Social Responsibility 26 Lifestyle 50 Ugly Betty star America Ferrera s smile worth $10 million Technology 46 Dates: The world s oldest Fruit The desert treasure not only has sustained life here but has become for Saudi Arabia what chocolate is to Switzerland The Saudi Indian Company for Cooperative Insurance boasts a marketing strategy that focuses on three main goals: maintaining the current clients of the protection and savings and general insurance services A Moral Obligation As insurance companies look to increase their commitment to social programs, the Social Responsibility Council announces a new booklength CSR manual Given 18 months, the company that helps to process 50 percent of all health insurance claims in South Africa says it can streamline Saudi Arabia s systems Interview 30 Cover Story 34 Travel & Tourism 54 Al- Sudairy: We have a transparent relationship with the Council Prague is one of the most beautiful cities in Europe. Set along the banks of the Vltava River, the city with its townscape of burger houses, palaces punctuated by towers Qualified Staff: An urgent need The necessity of training local staff for the insurance sector Around the World With the legacy of apartheid s system of racial segregation, high incidences of AIDS and an inadequate public infrastructure 62

4 Seven million insured fall under amended cooperative health insurance bill The Council (CCHI) has recently approved an amended cooperative health insurance bill that will cover more than seven million insured, 1,597 service providers and 25 health insurance companies. The amended bill includes major changes in terminology, fees and rules governing the issuance of insurance policies. The bill has also expanded the powers of the Board of Supervision and Control over accredited insurance companies and health service providers. The bill states that the council can withdraw the accreditation of any service provider if it is proved to have been involved in fraud, or in the case of any company s inability to maintain the health of its beneficiaries. The bill also requires that insurance companies send the names of insured persons to the national network of health insurance within 48 hours from the effective date of the policyholder, or face the consequences. The Council is striving to develop and improve the legislative and regulatory frameworks governing the health insurance market, it being one of the most active and dynamic sectors in the kingdom, said the Secretary-General of the (CCHI), Dr. Abdullah Al-Sharif. He says that following three years of implementing the cooperative health system, the recent amendments to the bill took place after a number of meetings Medical insurance companies deny coverage for retirees Medical insurance companies have declined to provide health insurance policies for 1.3 million retirees from the public and private sectors, calling on retirement and social insurance institutions to pay the insurance policy premiums on behalf of their members. The announcement came after a recent meeting held at the Jeddah Chamber of Commerce between the Retirees Association and medical insurance companies. Medical insurance companies justified their refusal by saying that the issuance of such polices is risky, as many retirees suffer from heart disease, diabetes and obesity, all of which lead to skyrocketing costs. They added that most retirees rely on fixed incomes and are less able to shoulder the burden of rising medical costs. The cost of an insurance policy ranges from SAR 2500 to 4000, while 30 percent of retirees live on just SAR Dr. Fouad Bogari, the Division Manager of the Retirees Association in Jeddah spoke to Al Madina newspaper about the with the council s members and partners in the health insurance industry. He also says the amendments aim to simplify application procedures and upgrade the cooperative health insurance system, reflecting the aspirations and needs of all parties. problem. Medical insurance companies think providing health coverage for retirees could be very risky, he said. I do not blame them, as insurance companies care only about profit and covering retirees will cause them large losses. According to health statistics from major government hospitals, a large proportion of retirees suffer from chronic illnesses, which prevent more than 80 percent of retirees from obtaining an insurance policy. As many as 30 percent of the retirees earn salaries of less than SAR 2000, the rest earning between SAR 2500 to 4000, but the cheapest insurance policy is worth SAR 2000, Dr. Fouad said. Ali Al-Aqla, a lawyer and legal counsel, agrees with Mr. Jad that retirement and social security institutions should pay the fees of medical insurance for retirees. Those organizations are making billion of dollars from retirees, so paying the fees of insurance policies will only represent a small amount of their annual profits. CCHI organizes six health insurance training sessions Over the last nine months, the Council has organized six intensive training courses and workshops. The classes covered several topics, including the cooperative health insurance system, service standards approvals, organizing medical claims, claims management and other issues related to the latest developments in the insurance market. The courses materials were prepared by a team from the staff of the Secretariat of the Council that specializes in cooperative health insurance. More than 150 health insurance sector staff members participated in the training. By organizing these courses we aim to raise the overall level of performance of the health insurance industry, by explaining the cooperative health insurance system, its operational standards and applications to attendees, said Dr. Mohammed Al- Naeem, the supervisor of the training courses. They also aim to raise the efficiency of workers in the health insurance sector by discussing the problems and how to deal with them in accordance with regulations and standards. He says the courses take into account a diversity of training methods, such as workshops, individual and collective exercises and brainstorming. The courses were based on a participatory approach, with an exchange of experiences and open debate. Dr. Naeem says the Council within its duty to promote the health insurance industry is determined to redouble its efforts to provide training for employees in the insurance sector, in addition to upgrading the insurance services and simplifying the working mechanisms between relevant parties. News Human Rights Assembly demands health insurance for prisoners Members of the National Assembly for Human Rights in Mecca have called for insurance companies to begin offering health insurance to prisoners. They also recommended the formation of a working group of Assembly members and lawyers, in accordance with the agreement between the Association and the National Committee of Saudi Lawyers, to follow up on prisoner conditions, especially those who are still awaiting deportation. The Assembly s members also called upon the Ministry of Health to provide sufficient vaccines for swine flu, arguing that the ministries of health and education must take necessary precautions to protect students from the disease. 6 Shawwal 1430 October 2009 COOPERATIVE HEALTH INSURANCE 7

5 CCHI official: Price of health insurance subject to supply and demand The price of medical insurance for employees in the private sector is subject to the rules of supply and demand and the Insurance Violations Committee will take action against any violators according to the Secretary-General for Technical Affairs at the Council. Secretary-General Dr. Abdullah Al- Hawsi says that seven million private sector employees are now covered by the new health regulations. He also says the implementation of the health insurance system is occurring gradually. As a result, only individuals who are working under their employer s visas are currently without health insurance. The Council will review the cooperative health insurance system every three years, or upon a decision from the President of the Council. CCHI considers establishing an insurance fund to cover excessive bills The Council recently met to discuss the steps needed to establish a so-called health insurance fund to cover excessive medical bills, according to Mr. Mohammed bin Salman Al-Hussein, the Secretary- General for Financial and Administrative Affairs at the Council and Committee Coordinator of the Health Fund. The new health fund will cover patients whose medical conditions require treatment that exceeds the maximum covered by insurance polices in Saudi Arabia an amount currently set at SR 250,000. Al-Hussein says that at its seventy-fifth session, the Council also reviewed a comprehensive health insurance study that had been prepared by the American (RI ACT) Office. Following that review, the CCHI Board recommended amending the study in areas related to the establishing and regulating of such a health fund. Upon completion of an amended study and in order to establish the new health fund as soon as possible, Al-Huseein says the council will begin seeking support and matching funds from other governmental bodies. CCHI names employee of the year Khalid Bin Mohammed Al-Moqrin, head of the Revenue and Collection Department at the Council, was selected as this year s Employee of the Year. Congratulating the winner during the award ceremony was Secretary General of the Council Dr. Abdullah Al-Sharif, who wished Mr. Khaled future success and happiness. Riyadh Chamber signs agreement with Wajeef Insurance Brokerage The Riyadh Chamber of Commerce and Industry signed an agreement with the Wajeef Insurance Brokerage, which will provide quality insurance services to the chamber s members in the city of Riyadh and surrounding provinces. This agreement is part of the chamber s efforts to support and serve all of our members and in response to a number of requests from smalland medium-sized enterprises to have a credible and committed insurance company to provide the right coverage, said Hussein Al- Athel, Secretary General of Riyadh Chamber of Commerce. We formed a special committee to review and evaluated bids and offers provided by other companies, and the choice was Wajeef Insurance Brokerage. Mohammed Al Amari, the Chairman of Wajeef Insurance Brokers, says that the signing of the agreement with the Riyadh Chamber of Commerce is as a major step towards providing the best services to the chamber s members. He praises the close cooperation and good spirit shown by chamber officials. Amari says medical insurance services provided to companies and institutions of the Riyadh Chamber of Commerce and its subsidiaries will be based on the Council regulations, in cooperation with the Mediterranean and Gulf Insurance Company. Members of Riyadh Chamber of Commerce will obtain a very attractive insurance premium, since the target of this program is the more than the 100,000 people in the branches, excluding the companies and organizations affiliated with the Riyadh Chamber of Commerce, he said. Tawuniya wins Saudi Telco insurance deal The Saudi-based National Company for Cooperative Insurance (NCCI) has won a major contract to provide health insurance to staff and family of the Gulf s largest telecom firm Saudi Telecommunications Co. (STC). NCCI, better known as Tawuniya, signed a three-year contract with STC to offer health insurance to its 20,000 employees for SR 507 million (US$135.2 million), or SR 169 million per year beginning October this year. News 8 Shawwal 1430 October 2009 COOPERATIVE HEALTH INSURANCE 9

6 SIMAH: Insurance premiums reached SR 10.9 billion Insurance premiums at the end of 2008 amounted to SR 10.9 billion (US $2.9 billion), an increase of 27 percent compared to 2007, the Saudi Credit Bureau (SIMAH) says. Nabil Ben Abdallah Al Mubarak, the Managing Director of SIMAH, says that the latest developments and regulations in the insurance industry raised the total claims paid to insured during the year 2008 to SR 5.2 billion (US$1.3 billion), achieving an increase of 29 percent comparing to Moreover, he says, the total number of employees in the insurance sector by the end of 2008 amounted to more than 5,447 employees, 45 percent of them Saudi nationals. Al-Mubarak says that SIMAH is providing a wide range of insurance products and services that aim to assess the solvency of the insurance sector and its financial clients, thereby reducing insurance costs for the insured. We endeavor to provide precise mechanisms and products to raise the efficiency of the insurance sector, speeding up the decision-making process, improving the quality of insurance services and reducing its costs, he said. He says that SIMAH has recently signed a membership agreement with Allied Cooperative Insurance Group (ACIG). Under the agreement, ACIG will provide SIMAH with information related to the payment of insurance premiums, both at the level of individuals or companies, as well as information from individuals and companies. ACIG from its part will get the needed information to assess the solvency of the current or prospective customers, which would help in determining the suitable services. Dr. Omar Zuhair Hafiz Abdul Qadir, the Executive Director ACIG, extolled the agreement s virtues, The agreement will undoubtedly contribute to the development and improvement of the level of transparency and credit culture in Saudi Arabia, which will reflect positively on the customer, financial transactions and on the national economy in general, he said. It will also help insurance companies in diversifying their products in line according to the needs of their clients. Specialized courses needed to develop insurance work force in Saudi Arabia Jeddah Chamber opens two insurance brokerage offices The Jeddah Chamber of Commerce and Industry, represented by the Jeddah Council for Business Development, opened two insurance brokerage offices for small- and medium-sized enterprises at its headquarters in Jeddah. Those offices will supervise the implementation of the Council resolution concerning compulsory health medical insurance for all workers in the private sector. The offices will provide small- and medium-sized businesses with affordable and quality insurance services. The Executive Director of the Jeddah Council for Business Development, Yusuf Al- Kharaz, says that the new initiative is intended to serve the 25,000 companies registered at the Chamber of Commerce and Industry in Jeddah. News Decision makers should encourage universities, colleges and training centers to create specialized insurance courses and training programs, key officials at Saudi insurance companies say. A number of universities in other Arab countries such as in Lebanon and Jordan already offer a bachelor in insurance, which is not yet the case in Saudi Arabia, despite its steadily expanding insurance industry. The call for new training is a result of the fact that many regional companies now face a critical shortage of qualified candidates specialized in the insurance sector, to the extent that most of these companies are seeking the help of foreign workers to address the shortage of specialized people in this field, and also to address the increasing demand on insurance services. The shortage is reported to be as much as 50 percent of the total demand and has also found local insurance companies not just hiring foreign staff, but training non-saudi workers at programs in neighboring and global markets. Sources close to several insurance companies in the eastern region say that licensed companies are currently contracting private institutions to train their employees, as local educational institutions have so far failed to meet industry requirements. The sources argue that Saudi universities should launch specialized colleges for insurance, as it is one of the nation s exploding labor sectors and urgently requires more skilled hands. Currently, there are already more than 21 licensed insurance companies in the Kingdom, and many of them have been forced to provide comprehensive training and intensive courses for their personnel. The sources say that insurance companies are ready to support the establishment of insurance colleges at Saudi universities. 10 Shawwal 1430 October 2009 COOPERATIVE HEALTH INSURANCE 11

7 Insurance companies neglect remote areas CCHI report: Total number of health providers grows by 20 percent News A number of remote governorates and areas far from major cities have little to no access to insurance services, according to reports. As much as 80 percent of the registered insurance companies operate out of Riyadh, while the remaining 20 percent are headquartered either in Jeddah or the Eastern Province. As a result, residents of remote provinces and areas must travel long distances to reach the nearest insurance company. This is at the same time as insurance in the country has become more and more an essential part of life featuring as it does protection for vehicles, health and life. The Saudi insurance sector gained steam just three years ago, and the 25 companies currently registered to operate here have been reluctant to open new branches, for fear of declining profits. Few have seriously considered the possibility of expanding or opening new branches in remote areas, and at the same time, few if any have conducted economic feasibility studies to determine if rural markets could be a profitable new part of the sector. The General Secretariat of the Council recently issued its 2008 annual report conceived to monitor and document the evolution of the health insurance industry in Saudi Arabia sheds light on the sector s important achievements. Such progress, the report concludes, is in part a result of the passage of a cooperative health rule requiring the extension of insurance coverage to all private sector workers and their families. The first chapter of the report discusses the growing number of accredited health providers. According to the report, the total number of providers has increased by 20 percent over the previous year s number; with a 36 percent increase in the number of clinics, an 11 percent increase in the number of hospitals, a 23 percent increase in the number of clinic compounds, and a 16 percent increase in the number of pharmacies. The report also indicates that in 2008, the private sector share of the total registered health facilities reached 97 percent, with 1,186 facilities, while the share of public sector was three percent, with 31 of the total number of the country s health facilities. The second chapter explores the status of the 25 qualified health insurance companies. With the continued expansion of the health insurance system, the report says it is expected that in the coming years the total number of insurance companies will increase significantly. Meanwhile, according to the report, the total insurance premiums reached an amount of SR 6.3 billion, SANAD appoints Sharia h committee Sanad Cooperative Insurance and Reinsurance (SANAD) a joint stock company with a paid-up capital of SAR 200,000,000 divided into 20,000,000 shares appointed Sheikh / Dr. Abdullah bin Mohammed Al-Mutlaq, Sheikh / Dr. Mohammed Ben Ali Al Quri and Sheikh / Dr. Lahem ben Hamad Al- Naser to its Sharia committee. The new committee will verify all Sharia h aspects related to the company s contracts and products and is also assigned to conduct periodic reviews of the company s commitment to Sharia h principles. Supervising SANAD s strategic planning and sound implementation is a board of directors comprised of 11 members, each appointed for a three-year term by the company s general assembly. SANAD specializes in cooperative insurance, operating via representatives, agents, brokers and other insurance companies. 12 Shawwal 1430 October 2009 COOPERATIVE HEALTH INSURANCE 13

8 News covering more than 4.8 million people until the end of 2008, the report says. The report also explores how companies have responded to new regulations and standards, including the stipulation that health insurance companies must coordinate with the Saudi Arabian Monetary Agency in order to ensure they are following the new regulations. The Monetary Agency will also carry out field visits and follow-up meetings with health insurance companies. The report also discusses a shift in how monitoring agencies will determine violations of the cooperative health insurance system. The responsibility to do such monitoring will now rest with the Department of Insurance Violation, which will handle disputes and is charged with explaining the rules and regulations to all concerned parties, in addition to conducting field visits to detect and determine the nature of any irregularities. According to the report, the department in 2008 received 121 complaints, 71.1 percent of them directed against insurance companies, 13.2 percent against employers, 8.3 percent against the Immigration Department and eight percent concerned a variety of other parties. Finally, the report outlines a recent study that explores the severe shortage of Saudi nationals who are qualified to work in the nation s insurance industry. The study estimates that the demand for local staff for the insurance sector will grow by nearly 90 percent over the next five years. Hospital 11% Diagnoses center 0% Physiotherapy center 0% Passports Auth 8% Type of accredited health care providers Poly clinic 36% Medical tests laborator 1% Glasses shop 9% other 7% One day operation 1% Employer 13% Pharmacy 16% One physitian clinic 3% Type of complaints taken in 2008 HCP 1% Insurance 71% Multi clinic 23% Kingdom of Saudi Arabia Council of Cooperative Health Insurance General Secretariat Alshafa Street, King Fahd Road. Fax: P.O.Box: Riyadh Customer Service Center (IVR) 14 Shawwal 1430 October 2009 w w w. c c h i. g o v. s a

9 Hot Topic Questions & Reflections: Amended cooperative health insurance by-laws The Council recently approved an amended set of health insurance by-laws that will affect more than seven million insured, 1,597 service providers, and 25 insurance companies. The amended by-laws seek to address and solve problems concerning benefits and pricing for Saudi Arabia s insurance policies. But these amendments, intended to do good, have had the opposite effect for some insurance company officials, who have announced possible price raises for policies and the likely necessity of imposing additional fees on some beneficiaries. To discuss the impact of these amendments on the Saudi insurance sector, we met with Dr. Abdullah bin Ibrahim Al Sharif, the Secretary General of Council (CCHI) and Dr. Omar Zuhair Hafiz, Chief Executive Officer of Allied Cooperative Insurance Group (ACIG). The reputed benefits For his part, Dr. Abdullah Al-Sharif says the new amendments aim to simplify and clarify the health insurance procedures for all parties, and that these amendments were approved after consulting with involved partners in the cooperative health insurance industry. The new amendments aim to keep pace with the aspirations of all parties, he said. This is a positive step toward developing the industry and improving the legislative and regulatory frameworks governing the sector. The amended regulations were based on the Council s decisions and after consulting with the involved partners in the health insurance industry. He says that the amended list of regulations would contribute to increasing the effectiveness of the health insurance market and would also improve the management of insurance claims. According to the Dr. Al-Sharif, the new rules include provisions for additional benefits for the insured, such as covering health counseling with specialists and consultants, dialysis expenses up to SR 100,000, expenses from treating acute psychiatric conditions up to SR 15,000, and the expenses of hospitalization. The amended list also sets the daily hospitalization rate at SR 600, and raises insurance benefits for pregnancy and childbirth, with an upper limit of up to SR 15,000 rather than SR 10,000, as well as increasing the benefits for IVF children to SR 250,000. Perhaps most importantly, the new regulations require that insurance companies cover beneficiaries of all ages, without specifying the age of the insured, and that policies must cover conditions that most commonly affect the elderly, including chronic diseases such as high blood pressure, diabetes and heart disease. The new system also requires insurance companies to grant health insurance to all workers in the private sector both residents and Saudis nationals and their dependents, including husbands, wives, male children under 18 years old and unmarried daughters. Industry concerns Speaking from the insurance companies perspective, Dr. Omar Hafez sees the impact of the new regulations quite differently. His chief complaints are 16 Shawwal 1430 October 2009 OOPERATIVE HEALTH INSURANCE 17

10 Hot Topic The new regulations cover the shortcomings of the previous list, as the health insurance market is subject to many variables. Dr. Al Sharif said. that the new health regulations should not have put all beneficiaries into one category and should have taken into account the greater cost burden on service providers. He also says health insurance coverage should have age limits, such as the previous cap of 65-years-old. Insurance companies have no clear stand now regarding those adjustments; as they are obliged to work under the Council regulations, Dr. Hafez said. I must note that the council has invited all insurance companies to submit their comments before approving the amendments. I am not sure, however, if the council asked the health service providers, and the beneficiaries of the service to submit their comments. Dr. Hafez say it s probably too late now to change the new amendments. Given a reasonable amount of time, however, he says insurance companies will have a better chance to make their case for changes, once the impact of the new rules becomes clear. I see that the new amendments aim to expand the scope of benefits for the insured, and the number of people under the health insurance coverage, Dr. Hafez said. This undoubtedly serves the health sector in terms of providing better care for more people, thus increasing the demand for health services. This will put pressure on service providers to improve their services and increase investments in the health sector. Dr. Al-Sharif is skeptical that the amendments will have a negative impact on insurance companies. He says that the new and previous list of regulations included specific paragraphs for the benefit of insurance companies and specifying their responsibilities towards the insured and service providers. The new regulations cover the shortcomings of the previous list, as the health insurance market is subject to many variables, Dr. Al Sharif said. Article 112 gives the Council the authority to review and make adjustments on the list every three years or whenever need arises. New fees Following the new rules, experts say insurance companies may have no choice but to increase the price of insurance policies for certain groups, such as pregnant women. But Dr. Al-Sharif says prices for insurance premiums are agreed upon with insurance professionals and actuary specialists. He says that some insurance companies may impose additional costs on insurance policies for women to cover pregnancy and childbirth, but there is a minimum age and an upper limit for such increases. The new system gives freedom to insurance companies to determine the rate of the insurance premium, in accordance with the regulations and standards set out in Article 33, paragraph (b), which states that insurance premium rates should be reasonable, and should not lead to a decline or increase in the price of the company products. According to the rules, insurance companies should also share with the Saudi Arabian Monetary Agency the mechanisms with which they determine prices. Further, rules state that insurance companies should not rely solely on other companies prices. Dr. Hafez, in turn, acknowledges that the amendments are in the interest of the patient and that they will likely increase costs for insurance companies. But that s all part of the plan, he says. Insurance companies will increase the prices of insurance policies to cover the new financial expenses, he said. I expect that price of insurance policies will witness a big leap in the beginning of 2010, with the renewal of new policies after the amendments became binding. For example, the cost of an insurance policy for married women and the elderly will definitely increase. Asked if the new amendments had fully addressed all previous deficiencies in the previous list, Al- Sharif was honest. We tried to cover all the deficiencies, but as you know the health insurance is subject to many variables, and the council has the authority to review and make adjustments on the list every three years, he said. I can assure you that the improving and reviewing process is Insurance companies have no clear stand now regarding those adjustments; as they are obliged to work under the CCHI regulations. Dr. Hafez said. ongoing and non-stop. We only aim to serve the health insurance market. Under the new cooperative health insurance system rules, employers must provide health insurance coverage for all their workers and their families. Currently, however, most employers provide insurance only for up to four persons the worker and three members of his family and sometimes for the worker alone. Would the new amendments really cover entire families? Yes, Dr. Al Sharif says, but only under certain circumstances. The cooperative health insurance system states that health insurance is compulsory for all workers in the private sector both residents and Saudis nationals and their dependents, including the husband, wives, male children under the age of 18 and unmarried daughters, he said. The system does not exclude any of them as long as they are living in Saudi Arabia. With the passage of the amended regulations, one question still remains: have insurance companies applied Article 87, which requires companies to appoint specialist doctors to verify if treatment is actually needed for employees? Insurance companies must abide by the provisions of the amended list, including the appointment of a pathologist in case the insurance company decided to get help from a third party to manage their health insurance claims, Dr. Hafez said. Dr. Hafez also stresses that the only way to deal with additional costs including appointing specialist doctors is to consider them when calculating the costs of insurance polices, in order to prevent any financial corruption or misuse of the policy. Insurance companies can establish special departments to manage the claims to prevent exploitation, he said. But with the lack of qualified Saudis in this field, I hope Council will address this issue with the Ministry of Labor to grant visas for doctors from aboard. Moving forward, Dr. Hafez says their were still unique and local problems yet to be addressed. I would also like to note that re-insurance represents an additional cost to insurance companies and may prevent them in some cases from providing appropriate prices, he said. Therefore, I suggest that the Council should coordinate with licensed re-insurance companies and other insurance companies to reach to a standard format for health reinsurance agreements, which would take into account the local variables and objectives of the health sector. 18 Shawwal 1430 October 2009 COOPERATIVE HEALTH INSURANCE 19

11 Qualified Companies Saudi Indian Company for Co- operative Insurance: The Saudi Indian Company for Cooperative Insurance boasts a marketing strategy that focuses on three main goals: maintaining the current clients of the protection and savings and general insurance services, increase revenue from the existing customer base by selling existing products and new products and, finally, attracting new business and increasing market share through various channels. The Saudi Indian Company for Cooperative Insurance ( SAUDI INDIAN ) was granted license to establish Joint Stock Co-operative insurance company in accordance with Royal Decree No.M/60 dated 18/09/1427H corresponding to 11/10/2006, and Ministerial Resolution No.233 dated 11/09/1427H corresponding to 9/10/2006. The Share Capital of the Company is SR 100 million consisting of 10 million shares of equal value, the value of each of them being SR 10. In accordance with the provisions of the Insurance Law issued by Royal Decree no. M/32 on 2/06/1424H, and its executive regulations and rules in Saudi Arabia, the Saudi Indian Company for Cooperative Insurance can practice all types of cooperative insurance, including reinsurance, representation, communication, and mediation, whether in insurance or investment funds, or sell/ lease/exchange cash and immovable property ownership. Insurance Services: The Saudi Indian Company for Cooperative Insurance offers a wide range of Al- Ameen products that was designed by established companies, including the Indian Company for Life Insurance, Life Insurance Corporation (International) in Bahrain, and New India Insurance Co. Ltd. The Saudi Indian Company for Cooperative Insurance offers two types of products: 1- General Insurance: Insurance of Motor Vehicles Private car & Commercial with a choice to opt for Comprehensive cover (Own Damage & Third Party Liability) or only Third Party Liability (for Driving License or Specific Vehicle) Property Insurance Insurance on fire damages and the associated risks, lightning, theft, loss of profits, comprehensive property insurance for all hazards Marine Insurance Internal transfer (roads, railways), insurance in accordance with marine shipping terms, marine insurance by mail, open policy, fees, vendors benefits, and naval vessels Engineering Insurance machinery insurance, boilers and pressure equipment and electronic equipment insurance 2- Protection and Saving Insurance: Takaful insurance plan providing a combination of savings and risk benefits in compliance with Takaful principles and covering various strata of society and the life cycle of individual/family protection plan Participating endowment plan (education, marriage) Cash-back plan Money back and protect lifelong Child benefit plan Double cover endowment Ashadeb plan Janarakesha plan Bimainc plan Jeevan Riva plan Collective insurance schemes Vision The Saudi Indian Company for Cooperative Insurance endeavors to develop a general Insurance business in the best interests of the community. The company will provide financial security to individuals, trade, commerce and all segments of the society at an affordable price, in the most professional manner, backed with international competence and a with focus on customer satisfaction. The company also aims to meet the challenges of the emerging market at the lowest cost while maximizing customer welfare. The Saudi Indian Company will increase its customer base, enter into new market segments, provide cost-effective insurance policies, and achieve superior returns for its shareholders; thus contributing to the development of the company s reputation in the Saudi insurance market. The company s marketing strategy focuses on three goals: maintaining the current clients of the protection and savings and general insurance, increasing revenue from the existing customer base by selling dual-existing products and new products and, finally, attracting new business and increase market share through various channels. To achieve the objectives of its marketing strategy, the Saudi Indian Company, which enjoys many years of experience, will focus on advertising and marketing campaigns for the protection and savings and general insurance services. It will distinguish itself from other companies by offering a wide range of products and customized insurance solutions, and broad- and high-quality services. Goals The Saudi Indian Company for Cooperative Insurance seeks to achieve a level of total annual premiums that will enable it to 20 Shawwal 1430 October 2009 COOPERATIVE HEALTH INSURANCE 21

12 Qualified Companies have a large market share, good returns on investments, and establish controls, regulations and internal standards that guarantee the rights of the insured. The company also aims to provide competitive insurance products by implementing strong and effective strategies and continuously looking for new business opportunities. The Saudi Indian Company promotes the good reputation of the company through advertising and quality services and products to suit local requirements. Moreover, the Saudi Indian Company for Cooperative Insurance extensively works to increase its Saudization rates, expand the company s customer base by opening new branches, establish new distribution channels in accordance with the principles of insurance firms and control standards, transfer risk through reinsurance with major international reinsurance companies, and expand its investments to include investments in bonds and securities. Competitive advantages The Saudi Indian Company has many competitive advantages compared to other insurance companies. The most important advantage is the good reputation of its founders and their many years of experience in the insurance market. The company is also one of the few companies that offer a wide range of protection and savings insurance products. Moreover, it provides the necessary support from its established companies, which boast extensive experience in this area. The Saudi Indian Company itself has an extensive knowledge of local and foreign communities, and its management team boasts many years of experience. The company s diverse customer base covers the sectors of general insurance and protection and savings insurance. Finally, the Saudi Indian Company has signed many reinsurance agreements with international companies in the area of reinsurance. Message The Saudi Indian Company for Cooperative Insurance endeavors to develop a protection and saving and general insurance business that is in the best interest of the community. The company provides financial security to individuals, trade, commerce and all segments of the society at an affordable price, in the most professional manner, backed by international competence and with a focus on customer satisfaction, thereby meeting the challenges of the emerging market at the lowest cost while maximizing the customer s welfare. The Saudi Indian Company for Cooperative Insurance seeks to achieve a level of total annual premiums that will enable it to have a large market share, good returns on investments, and establish controls, regulations and internal standards that guarantee the rights of the insured. The Saudi Indian Company aims to increase its customer base, enter into new market segments, provide costeffective insurance policies, and achieve superior returns for its shareholders; thus contributing to the development of the company s reputation in the Saudi insurance market. Moreover, the Saudi Indian Company for Cooperative Insurance works to increase its Saudization rates, expand the company s customer base by opening new branches, establish new distribution channels in accordance with the principles of insurance firms and control standards, transfer risk through reinsurance with major international reinsurance companies, and expand its investments to include investments in bonds and securities. Partnerships The Saudi Indian Company has a strong relationship with its established companies, including the Indian Company for Life insurance, Life Insurance Corporation (International) in Bahrain, and New India Insurance Co. Ltd., which provide administrative and technical support to the new management under administrative and technical agreements. The company aims to sign a number of management and technical agreements with the Indian Company for Life insurance, Life Insurance Corporation (International) in Bahrain, and New India Insurance Co. Ltd., and any other appropriate companies. Such agreements will take place after approval from the Saudi Arabian Monetary Agency (SAMA) in regards to the actuarial estimates, product development and information technology services and re-insurance and health care. The company will also sign a number of administrative agreements and agreements with experts in relevant work areas after getting the necessary approval from concerned authorities. The Saudi Indian Company on November 1, 2005 signed a financial advisory services contract of SR two million with Manar Sigma Financial Consulting. According to the agreement, Manar Sigma Financial will assist the company in preparing its financial file to SAMA, according to the cooperative insurance companies system. Additionally, Manar Sigma Financial will provide financial advice to the Saudi Indian Company for six months starting from the date of signing of the agreement, subject to renewal for another period. Investment policy The regulations established by the Saudi Arabian Monetary Agency limit both the investments in some products and the debt levels for multiple instruments. Since the standards vary for the savings and protection and general insurance funds, they must be considered separately. Therefore, the Saudi Indian Company distinguishes between shareholder funds, and the amounts that have been obtained from Takaful products. As a result, the company will manage four categories of funds, taking into account the orders and the returns and evaluating the investment tools and boundaries to prevent loss. The company s policy of investment focuses on guarantee of assets liabilities and their application under SAMA rules. It may give the total investment amount or part thereof to an external investment manager, or external investment managers to manage. The Saudi Indian Company plans to provide protection and savings insurance under policies aimed at different groups, such as employers, employees, professionals, cooperative societies, and other sectors of society. In spite of the fact that international companies dominate the collective insurance market, the Saudi Indian company is offering competitive collective protection and saving insurance products based on low premiums, simple conditions and easy manageability by issuing one policy covering all staff members. The insurance premiums are determined by age, number of members, occupation and working conditions of the group. But there are certain conditions for the application, such as the minimum size of the group, and the minimum number of participants to make the plan viable. The Saudi Indian Company also plans to offer protection and saving products for the local population. Research and marketing The Saudi Indian Company s existing products comply with the current requirements of the market. The company will design comprehensive insurance coverage and comprehensive insurance policies for different types of personal insurance, according to market changes and future requirements. The company intends to focus on specific areas of research and development that could help in creating new insurance coverage, providing customized insurance solutions as requested by the client, promoting actuarial studies and implementing new insurance systems. It is expected that the Saudi Indian Company will become one of the more competitive, organized and effective companies in the market. Consequently, in order to succeed in this changing environment, the Saudi Indian company aims to distinguish its insurance services from the services provided by other insurance providers. The company s marketing strategy focuses on three goals: maintaining the current clients of the protection and savings and general insurance; increasing revenue from the existing customer base by selling new products and dual-existing products, which were designed by the founders; and, finally, attracting new business and increasing market share through various channels. To achieve these objectives, the Saudi Indian Company, which enjoys many years of experience, will focus on advertising and marketing campaigns for the protection and savings and general insurance services. It will distinguish itself from other companies by offering a wide range of products and customized insurance solutions, in addition to broad and high quality services. 22 Shawwal 1430 October 2009 COOPERATIVE HEALTH INSURANCE 23

13 In Germany, employees are insured only for accidents outside the toilet The German Federation of Trade Unions issued a warning to workers and staff indicating that the company insurance policy covers only work-related accidents outside the toilet, Asharq Al Awsat reported. Eberhard Ziegler, from the Federation of Insurance Companies Against Work Accidents, says that insurance companies consider accidents outside the toilet to be work accidents, and they will pay for such accidents. But he says they will not bear the costs of what might happen to the employee while he is inside the toilet. Ziegler stresses that such insurance coverage only covers accidents during working hours not the costs of private accidents. This means that insurance companies will compensate workers if they were hit by a car or if something falls on them on their way to the toilet, but they will not compensate a worker if a bulldozer storms in while he is inside the rest room. He says that insurance companies typically cover accidents outside the company canteen, but they are not responsible for the incidents inside, like injuries to a hand from smashing dishes. Insurance companies will also compensate the staff members during work-related parties, Ziegler said. But they will not pay a penny if the employee injured himself during a fight at the party. Ziegler advised all workers and staff members to submit requests for compensation from their companies regardless of the place of the incident. The employment tribunal will consider each case according to circumstances and decides whether the victim is entitled to compensation or not. Ugly Betty star America Ferrera s smile worth $10 million A picture is worth a thousand words, but did you know a smile is worth US$10 million? That is the value of an exclusive insurance policy that Aquafresh has secured for the smile of America Ferrera, the star of the hit television show Ugly Betty. The Lloyd s of London policy was revealed in New York City by Aquafresh White Trays. Officials say Ferrera s policy is one of the most valuable the prestigious insurer has ever granted for a body part. The announcement is part of a program to raise money for Smiles for Success, a nationwide organization that provides free dental care for women transitioning from welfare to work. New Aquafresh White Trays is supporting Ziegler s comments came after the launching of the Insurance Companies Federation s report on work relatedaccidents, which stated that more than 960,000 Germans suffered from workrelated accidents in Smiles for Success by donating US$1 for every purchase. While Ferrera s US$10 million smile may be one of the most recent celebrity body parts to be insured, Ferrera joins an esteemed list of famous parts, which has included Keith Richards fingers and Jamie Lee Curtis s legs. Real Madrid insure Ronaldo s legs for 100m Real Madrid has protected itself in the event of Cristiano Ronaldo suffering a serious injury by insuring the Portuguese superstars legs for the grandiose sum of 100 million. The former Manchester United star, who singed a record-breaking 94 million switch to the Bernabeu, has been given unique treatment in keeping with his importance to the side. Given how much they d invested in the player, it was no surprise that Los Blancos acted quickly to ensure that they would be compensated in the event of Ronaldo being unable to play. Cheese taster s nose insured for $8.2 million A master cheese grader in Somerset, UK, has insured its cheese taster s nose for $8.2 million because his expert sense of smell earns a lot of money each week. The British Broadcasting Corporation (BBC) reported that Nigel Pooley, 63, has worked at family-run Wyke Farms, in Somerset, for the past 12 years. Pooley s bosses will now pay insurance firm Lloyd s of London $41,000 a year to insure Pooley s nose and sense of smell. A representative from Lloyd s said that Pooley breaks new ground as our first cheese nose. It is noteworthy that the $ 8.2 million was calculated by multiplying the period needed to replace Pooley, which is around 5 weeks, by the loss of the company per week, which is equivalent to $1.4 million. I hadn t thought about the value of my nose before, it s just part of what I do. I suppose I took it for granted until now. I love what I do and I will continue doing it, said Mr. Pooley. Snippets Woman s death sheds light on U.S. health insurance crisis The tragic stories of people without health insurance in the United States are numerous. This story is about an uninsured woman, aged 27 years old and suffering from cancer. She was still responding to the treatment when her doctors gave her family the bad news. The woman had been connected to the breathing machine for 25 days. At that point, her family was notified that the hospital would give her 10 more days. On the 11th day, they would turn off the machine. The woman s family was in shock. How could doctors stop the medical treatment if the patient was responding to treatment? They tried to move their daughter to a free hospice and to reach out to charity but no one responded. The woman died immediately after they took off the breathing machine. According to the victim s sister, the problem was funding. Her sister died because she had no insurance. Former U.S. President George W. Bush had announced that he would reform the nation s health care system, but nothing was achieved. Now it is current President Barack Obama s turn. 24 Shawwal 1430 October 2009 COOPERATIVE HEALTH INSURANCE 25

14 Social Responsibility Social responsibility A As insurance companies look to increase their commitment to social programs, the Social Responsibility Council announces a new book-length CSR manual Confusion about concept One matter little understood among those in the Saudi Arabian business community is the basic idea of Corporate Social Responsibility (CSR) and its actual role in helping improve the community. In fact, as was determined over the course of a recent survey, many companies in Saudi Arabia are still unaware of the concept at all, which explains why the Saudi government decided to form a Social Responsibility Council headed by Prince Sultan bin Salman. The same is true for the country s insurance companies, some of which do not fully understand the concept of CSR. This was clearly demonstrated during a recent investigation, during which surveyed companies responded with puzzled queries, among them: What do we mean by social responsibility, and is there a difference between CSR and charity? This confusion explains, at least partly, the scarcity of social responsibility programs in the Kingdom. However, there were several insurance companies that were aware of the role and importance of social responsibility in achieving economic and social development. Towards a new concept To discuss the past and future of social responsibility and in particular how CSR can be adopted by the country s insurance companies we met with Dr. Murad Zuriekat, the Business Development Director at Arabia Insurance Cooperative Company, and Mr. Askar Al-Harthy, the Secretary General of the Social Responsibility Council in Riyadh. Social responsibility programs are carried out by the private sector and help strengthen society, Dr. Murad said. Such programs are not elective, but should be seen as part of a company s duty toward society and government. Dr. Murad says that the Saudi government has been generous in providing financial and moral support to the private sector, in addition to defending their interests before international trading blocs. As we call upon the security services to carry out their responsibilities, we call on the society s institutions, including the private sector, to carry out their responsibilities in promoting community safety and crime prevention, he said. Dr. Murad points out that an individual with a nuanced concept of corporate social responsibility should understand that every company must engage with shareholders, investors, employees, customers, suppliers, the community in which they operate in, and the environment in a responsible manner based on moral foundations, and transparent principles. In spite of the fact that the insurance sector in Saudi Arabia is still young, most insurance companies are offshoots of long-standing companies with deep roots in the country. Given this fact, Dr. Murad says it is not entirely excusable that there are so many insurance companies that have not in any meaningful way implemented or upheld the ideas of corporate social responsibility. Dr. Murad points out that, especially for a place with a religious core as fundamental as Saudi Arabia s, social responsibility should be a familiar idea. After all, this idea is at the heart of the Islamic principles. The first model of the Islamic nation and society in the era of the Prophet Mohammed, peace be upon him, is a great example that all fellow Muslims must pursue in all times and places, he said. The caliphs and the companions had applied the concept in various manners including in terms of politics, society, economics, and the environment. Even with these religious roots of social responsibility, some companies in Saudi Arabia see social responsibility as a strictly Dr. Murad voluntary initiative. Most agree, however, that a solid definition of corporate social responsibility is the one established by the World Business Council for Sustainable Development: CSR is the continuing commitment by businesses to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families, as well as of the local community and society at large. External and internal factors Understanding CSR requires both an internal and external view, Dr. Murad says. On one hand, CSR refers to the ethics with which an organization conducts itself with regard to its internal and external stakeholders both customers as well as employees. On the other hand, CSR refers to the way an organization conducts itself with regards to the environment and society in which it operates. Dr. Murad makes it clear he has considered both views. Arabia Insurance Cooperative Co. is part of the economic fabric of the Kingdom of Saudi Arabia, and must play its part in the service of this noble society, he said. Once we complete the development of all our departments and branches all over the Kingdom, we will be one of the supporters of CSR and a key provider of diverse insurance services. Dr. Murad says that although the Arabia Insurance Cooperative Co. does not at present have any specific social programs, the company will be unveiling specific initiatives in the near future. We believe that providing luxurious and high quality insurance services is a kind of social responsibility, Dr. Murad said. Certainly, we will be taking into account the social responsibility programs within the annual budget for the company, given that the company is part of the insurance industry in Saudi Arabia, and must play its role in this area. A profitable moral obligation While it may be true that private businesses have an important role to play in social and economic development around the world, Dr. Murad says that that the private sector is not a charity and that a company s chief concern is ultimately to achieve the highest return of profit to its owners. Balancing profit against social commitments is hard, he says and realizing that CSR can actually help a company make money can sometimes be even harder. But this profit can be put toward expanding infrastructure, promoting development needs, and distributing wealth to impoverished people in society. There is a need to remind companies about their social and ethical responsibilities, Dr. Murad said. They must ensure that profit is not linked to immoral or illegal practices such as child labor, inequality in wages, bad working conditions and denial of the basic rights of the individual. Moreover, the basic role played by the companies, being the main source of wealth, employment and modernization, obliges them to carry out their duties in accordance with the social and modern concepts. Beyond being a responsibility, CSR actually offers clear benefits both internally and externally to the companies involved in various projects, says Dr. Murad. Externally, CSR improves a company s image among potential customers and earns a company special respect from its competitors. It also creates short-term employment opportunities in that a company engaged in CSR will likely undertake various community-oriented projects such as the construction of parks and schools. 26 Shawwal 1430 October 2009 COOPERATIVE HEALTH INSURANCE 27

15 Essay Internally, a commitment to social responsibility cultivates a sense of loyalty and trust among the employees. This commitment also improves a company s operational efficiency and can lead to increases in quality and productivity. More importantly, social responsibility serves as a meaningful diversion from routine workplace practices and gives employees a feeling of satisfaction and meaning. As a result, Dr. Murad says, companies that commit to CSR often find that employees are more motivated and are thus more productive. Asked if there was competition among insurance companies committed to social responsibility, Dr. Murad says it is too early to know. Businesses mainly focus on profit-making, and improving the values of their stock, he said. But they are at the end social institutions and should exercise responsible citizenship by strengthening social stability and promoting a sense of belonging, which will eventually contribute to their success. Workers in the insurance sector are citizens first, and they have rights towards their country and community. Dr. Murad expressed frustration at the slow adoption of CSR among Saudi companies. All of us must contribute to the formation of a strong, consistent and healthy society, he said. We must move beyond intermittent corporate contributions to charity, and the seasonal support of non-profit projects, to adopt integrated social responsibility programs. Up to this moment there is no competition between insurance companies in this regard. Among Saudi Arabia s insurance companies, there may not yet exist a widespread and comprehensive commitment to social responsibility but many companies have begun to implement one form or another of social responsibility. Time will help crystallize a uniquely Saudi version of this concept, to be forged in the executive departments of those companies and to be implemented in society to such a degree that CSR is no longer just concept, but a reality. Study: CSR in Saudi Arabia The Secretary General of the Social Al-Harthy Responsibility Council in Riyadh, Mr. Askar Al-Harthy, says that social responsibility is still a new concept in Saudi Arabia, having gained attention for the first time here only five years ago. Al- Harthy admits that the pace of launching social responsibility programs is rather slow, but he says the council is helping companies in accelerating this pace, adding that many companies are already beginning to express a willingness to learn more about CSR and ways to implement related programs. Our goal is to spread the culture of social responsibility and clarify the fundamental aspects of this concept to all companies interested in implementing social responsibility programs, and to assist them in deciding how to start, Al- Harthy said. Al-Harthy says the Council is preparing a comprehensive study that will in part define CSR for Saudi companies and other interested parties. The study will include four chapters: The first will discuss different definitions of CSR; the second will highlight related policies and procedures; chapter three will include a field study about companies that have applied CSR programs; and the fourth chapter will suggest possible CSR programs. The study will be printed and disseminated to companies across the Kingdom, Al-Harthy says. We are working with companies free of charge, to strengthen the role of social responsibility in society, Al-Harthy said. Any company with a question about social responsibility may access our website and fill out a form with their requests, and we will reply to them as soon as we can. Concerning the insurance sector s adoption of CSR, Al-Harthy explains those organization s sluggish progress with the fact that 70 percent of insurance companies were only established within the last two years. Insurance companies are starting to invest in social responsibility, as they consider it a vital component for any organization to succeed and create a brand, Al-Harthy said. Some investors, for example, refuse to invest in companies that do not implement social responsibility programs. As a result, corporate social responsibility is beginning to be taken more seriously. Asked if there would be any sanctions imposed by the Council on companies without CSR programs, Al-Harthy said no. Social responsibility is voluntary work, not mandatory. Implementation depends on the company, so we do not impose adoption by force and will never do so. But we are counting on the insurance sector to play an important role in promoting CSR in the Kingdom and across the Arab world. Al- Harthy says that while preparing the study and looking to promote CSR, the council studied the positive experience of companies in Western countries that embrace social responsibility. He also pointed out that Saudi Arabia is ranked first among Arab countries in adopting and promoting the culture and the concept of social responsibility. Al-Harthy concluded by saying that Riyadh Chamber of Commerce and Industry will continue to play a significant role in embracing CSR, in that it is the organizer for the Corporate Social Responsibility Awards, which provide a platform to recognize and reward companies that have demonstrated true commitment, delivered outstanding results and impacts, and shown innovation and leadership. Swine flu: Why is no one targeting pigs? By Brigadier General Dr. Saleh Al-Tassan Scientists, research institutions, and the media must consider the theory that pigs are quite possibly the common denominator in recent deadly flu epidemics. Take the world s freshest outbreak: The so-called swine flu virus or H1N1 virus is said to be capable of mutating from one form to another, which makes it difficult to cure. And vaccine companies have so far been able to distribute only as few as 300 doses. It s a nasty virus. Most hospitals in the world, especially those in poor countries, have been unable to cope, just as several years ago they struggled to accommodate those infected with avian flu. The situation is so dire that calls have come for international health organizations to at least consider activating world-wide quarantine measures. More importantly, I want to argue, is the fact that scientists and academics should begin seriously considering the theory that the avian influenza epidemic was first incubated on pig farms. (This would prove the wisdom of Islam, which forbids Muslims from eating pork because pigs are considered unclean.) After all, pigs are a natural carrier of the influenza virus. In 1957, the spread of the H1N2 virus in pigs began in Europe. This flu was a combination of viral influenza and human influenza. A later variety, the H3N2 virus, which combines bird, pig and humans viruses, soon reached the United States. Most recently, the spread of avian flu was traced to chickens in China chickens that had been bred alongside pigs. The disease spread to the rest of the world, and as a result, more than 200 million birds were killed. But perhaps the real culprit the pork industry should have been the target all along? It is my contention that officials at the highest levels of scientific and academic institutions have failed to consider the possibility that pigs are the original source of avian flu and perhaps may have been a root cause of SARS, or perhaps even AIDS, which is commonly thought to have originated in primates. I now call upon doctors, researchers and research centers to carefully study H1N1 and attempt to battle the disease with every possible tool at their disposal. As they work, I also challenge them to consider all manner of causes for the epidemic including the role pigs may have played in the flu s development and its passage to humans. The spread of swine flu has already resulted in human and economic losses. But the role pigs may have played should not come as a total surprise. After all, some have warned that pigs could carry both bird flu and human flu, creating a situation in which the two flu viruses could combine, which in turn could result in a new virus capable of infecting humans. The problem is that so few scientists or institutions paid adequate attention to such concerns. Consider the facts: There are at least a few examples illustrating the danger of pigs to humans. In 1976, an American soldier was infected with swine flu, which resulted in a worldwide panic, for fear this new swine flu could spread as quickly and with as much deadly force as did the catastrophic flu epidemic of Then, in early 1977, a group of anti- Castro Cubans in cooperation with the American Central Intelligence Agency is reported to have smuggled an African swine flu virus into Cuba. The virus was reportedly placed in a box and transported by one of the Cuban agents into Cuba, where the fever is said to have spread, resulting in the deaths of an estimated 50,000 pigs but no human fatalities. Thereafter, pigs in Africa and the Iberian Peninsula were also found to have died, which resulted in the wholesale slaughter of a number of pigs but not before the virus is said to have reached Northern Europe. Even if few human deaths resulted, it is still no surprise that Western countries have since implemented strict procedures for animal importation. The worry in the late 1970s was that humans would begin to catch this new flu. All these years later, that s precisely what seems to be happening with H1N1. As a result, the prevention of future humanto-pig flu transmissions should be a high priority. Serious attention to the danger of pigs will be key to understanding how the current flu spread and how we can avoid the future role of pigs in the spread of flu pandemics. 28 Shawwal 1430 October 2009 COOPERATIVE HEALTH INSURANCE 29

16 Interview Al- Sudairy: By: Mustafa Shehab He describes the relationship between his office and the Council as transparent and independent, emphasizing that the accounting and audit industry in Saudi Arabia is doing very well. We met with Mr. Al- Sudairy to discuss the role SOCPA plays in the country, including the developing of accounting and auditing standards and monitoring the performance of legal accountants, among other duties. You are responsible of responsible for the legal accounting services at the Cooperative Health Insurance Council, how do you describe the relationship between SOCPA and the council? Our work with the Council of Cooperative Health Insurance is based on the complete respect of the Council and its work as a semi-governmental oversight agency. I must note that the council s financial system is based on business principles and it covers its expenses from the revenues of the health insurance sector. Of course, the relationship with the Council, as with any other body we work with, is based Abdulaziz bin Turki Al-Sudairy is a member of Saudi Organization for Certified Public Accountants (SOCPA), a member of the Advisory/Consulting Services Committee, and is responsible for the legal accounting services at the Cooperative Council for Health Insurance (CCHI). on the principles of transparency and disclosure and independence, and I stress transparency. How do you define transparency? If you searched for the word transparency in any dictionary in any culture, you will see that the word is always linked with honesty, sincerity and justice. In physics, transparent means easily seen through, or allowing light to pass with little or no interruption or distortion so that objects on the other side can be clearly seen. Transparency is a metaphorical extension of the meaning of transparent : that an object is one that can be seen through. It implies openness, communication and accountability. Transparency is the condition in which nothing is hidden: Prices, the volume of trading and other factual information must be available to all. Transparent procedures include open meetings, financial disclosure statements, budget reviews and audits. Why transparency and disclosure principles have became so important, why now? In recent years, transparency and accountability have become important themes in public financial management. Because they do not have the authority to obtain information directly from corporate management, many shareholders, investors and foreign companies depend on information published by corporations. It is no doubt that a lack of transparency or disclosure requirements could make the published data and the financial statements misleading, and this will reflect badly on the decision-making by the shareholder or the investor interested in such information and data. It could be argued that the bankruptcy of some companies, and the collapse of some financial markets, is due primarily to the lack of commitment to transparency and disclosure. Therefore, companies commitment to transparency and disclosure is the most important issue right now and has received more and more attention because of the worldwide economic crisis. Apart from the scientific definition to it, in economics and politics, transparency means creating an open environment that allows all information, data or methods of decision-making related to individuals or companies to be available to all. We should differentiate, however, between the initial disclosure and transparency, as the latter is more general and could be applied on various aspects of life, politically, socially and culturally. Corporate transparency requires the removal of all barriers to and the facilitation of free and easy public access to corporate, political and personal information, including access to the laws, rules, and processes that facilitate and protect individuals, shareholders and corporations. Companies can only withhold information if publishing such information will harm the interests of the company. In this case, information is permitted to be kept confidential. What about the independence of the auditors, how important is it? Undoubtedly, the key element of quality control (according to the Saudi Organization for Certified Public Accountants), is independency. We at SCOPA require all accounting firms to be purely independent when conducting their auditing. We assist auditing and accounting firms in implementing accounting policies, and we act appropriately to assure that these firms and their staff are completely independent. We reject any activity if we discover any violation of quality control. For SCOPA and the bodies we work with this issue is very important. How would you describe the accounting and audit activity in the Kingdom and its compliance with global accounting standards? The accounting and audit system in the Kingdom is performing amazingly. If you follow the achievements of the Saudi Organization for Certified Public Accountants, you will see that we have achieved many of our goals: 1- Accountants who have conducted a fellowship in SOCPA are now exempted from taking CMA and CIA tests 2- The International Federation of Accountants chose the SOCPA Secretary General as a member of federation s committee for developing countries 30 Shawwal 1430 October 2009 COOPERATIVE HEALTH INSURANCE 31

17 3- The International Federation of Accountants has asked SOCPA to review the Arabic content of their website 4- The International Federation of Accountants has listed SOCPA among the 16 international Certified Public Accountants bodies to have benefited from their experience in the improving of the accounting and auditing profession The insurance sector in Saudi Arabia is still quiet young. What is its financial situation? Despite the relative youth of the insurance sector, the growth rates are ranging between 15 percent and 20 percent and is expected to hit SR 56 billion by Taking into account the opportunities the sector is providing, I think the future of insurance in Saudi Arabia looks very good. Can an accountant or legal audit uncover fraud in companies financial figures? The procedures followed in reviewing financial figures and statements are based on the controls and standards set by SOCPA. Therefore, everything depends on this criteria, which will help in tracking any misleading information or misleading references. In the end, auditors can only give their opinion on the fairness of financial statements, they do not determine whether these statements are correct or incorrect. What are the regulatory standards applied by which the Ministry of Commerce requires accountants to ensure they abide by the country s regulations? The Chartered Accountants System has identified a number of controls to govern the issuance of license to practice the profession of accounting and auditing. The number of licenses issued from the period from 1976 to today is 390 licenses, while the number of cancellations for the same period has reached 221 permits. The system has also made Chartered Accountants take responsibility for errors they have made even if those errors were made unintentionally. The number of violations for the period from 1994 until 2007 reached 240 violations, including an escalating system that begins with conservation, blame, warning, suspension, and write-offs). SOCPA has also established quality control program to monitor the quality of professional performance. To achieve this, the authority prepared a set of quality control standards for accountants and established an accounting office monitoring program to check the performance of these offices. What role does SOCPA play in developing the accounting and auditing profession in the Kingdom? Article (19) states that the Saudi Organization for Certified Public Accountants will operate under the supervision of the Ministry of Commerce, in order to promote the accounting and auditing profession and all matters that might lead to the development of the profession and the elevation of its status. SOCPA key objectives are: Review, develop and approve accounting and auditing standards Establish the necessary rules for a CPA certificate examinations, including professional, practical and scientific aspects of the audit profession and applicable regulations Organize continuous education programs. Establish an appropriate quality review program in order to ensure that Certified Public Accountants implement professional standards and comply with the provisions of Certified Public Accountants Regulations and relevant by-laws Conduct special research and studies covering accounting, auditing and other related subjects Publish periodicals, books and bulletins covering accountancy and audit-related subjects Participate in local and international committees and symposiums relating to the profession of accounting and auditing Why did you choose this profession? There is no doubt that the accounting and auditing profession is the safety valve for the country s economy. I found fertile ground in Saudi Arabia for this profession, which has evolved significantly year after year and has achieved a leading status over other Arab countries and some developed countries. That is why I chose this profession; it is what I love to do. My name is Abdulaziz bin Turki Al- Sudairy, I have been working as a chartered account since 1409H. I am a member of the Saudi Organization for Certified Public Accountants and a member of the Consulting/Advisory Services Committee. 32 Shawwal 1430 October 2009

18 Cover Story Qualified Staff: An urgent need The necessity of training local staff for the insurance sector By: Faisal Al-Shaya Dr Abdul Karim Al- Nahdi: The insurance sector is one the fastest growing sectors in the Kingdom, particularly following the introduction of compulsory insurance regulations for nearly eight million residents. But as a result of this rapid growth, the Saudi market is now in dire need of trained and qualified specialists and staff to meet the increasing market demand on the nation s health insurance system. Hassan Abou El- Seoud: The shortage of qualified staff has forced insurance companies in Saudi Arabia to pay high salaries to secure local staff, which in recent years has led to exponentially higher wages for insurance professionals, as compared to those in other professions. Abdul Razak Idris: Medical insurance requires qualified medical staff who are able to understand, implement and guide patients toward the maximum benefit and the highest standard of treatment. Have you ever wondered where insurance originated, who was the first to be insured, and why? Medical insurance as we know it today is widely believed to have appeared for the first time in Europe in the 1600s, when craftsmen established collective funds. With the spread of industrialization and its related health risks, the security that comes with health insurance was soon sought by other professionals. Eventually, rather than workers having to pay for its themselves, employers began to provide medical insurance for employees, a move that found a huge level of support from labor organizations. Insurance in Saudi Despite its many years in the region, the insurance sector in this country in particular suffers from a shortage of the kind of qualified local candidates required by local companies. This is an especially frustrating problem for Saudi Arabia, given the fact that the government has recently implemented new regulations and elevated the role of regulatory bodies, setting the stage for insurance companies to grow for the benefit of citizens and residents. The problem is that companies cannot grow without good employees. Dr. Abdul Karim Al- Nahdi, acting Director of the claims department at Allied Cooperative Insurance Group (ACIG), discussed the situation. The insurance sector is one of the fastestgrowing sectors in the Kingdom, particularly following the introduction of compulsory insurance for nearly eight million residents. But as a result, the Saudi market is now in dire need of trained and qualified specialists and staff to meet the increasing market demand on the nation s health insurance system. He also says medical staff need to be trained in several areas, such as in cryptography, medical and public underwriting, claims reviewing, marketing of insurance documents, documentation and the detection of manipulated claims. Addressing the shortage of qualified staff requires a concerted effort from various institutions and agencies in the public and private sectors, including health insurance companies, providers of health services, hospitals and clinics, the Chamber of Commerce, the Health Insurance Council, and the Saudi Council for Health Specialties, he said. In Saudi, there are currently few options for insurance training. Al-Nahdi says that the availability of insurance training is now limited to a small number of local public and private educational institutions, including the Specialized Academy for Medical Training, the General Directorate of commercial education, the Institute of Banking, and the Community College at King Saud University in Riyadh. Across the region, meanwhile, institutions that provide insurance training include ones at the Kuwait Institute for Insurance, the Egyptian Institute of Insurance, and the General Authority for Health Insurance in Egypt. There is no specific period for the training programs, Al-Nahdi says, noting that requirements vary from one program to another and from one type of insurance to another. The training programs should also take into account the development of the insurance sector in each country and the needs of society. Another expert is Hassan Abu Al- Saud, the Director of policyholders in the Arabian Shield Cooperative Insurance Company. Mr. Abu Al-Saud believes that the region s lack of advanced capabilities in risk management and insurance results in a disproportionate reliance on international reinsurers in providing risk assessment and appropriate pricing mechanisms. He says imported pricing mechanisms are neither suitable for insurance or reinsurance companies, nor for the insured. These mechanisms, says Abu Al-Saud, are incommensurate with the actual and real factors affecting the sector. He says local companies, therefore, are subject to spontaneous non-balanced competition, which will lead ultimately to the instability of this vital and important market. The shortage of qualified candidates, according to Abu Al-Saud, has forced local insurance companies to seek staff in neighboring and global markets. Others have had to pay higher salaries to secure local staff, which in turn has led to exponentially higher wages for insurance professionals, as compared to those in other industries. The current situation is untenable. Required training Speaking about the knowledge needed to succeed in Saudi Arabia s insurance industry, Abu Al-Saud says many different areas of expertise are required. Working in the insurance sector requires comprehensive technical, statistical and mathematical knowledge in different areas, including in business, management, and engineering, he said. Candidates should also have a broad knowledge of different insurance operations, including marine, fire, engineering, vehicle, life and health insurance. There are various types of insurance courses that can be studied in many colleges and universities around the world, including in Arab countries, he said. Practical experience plays a vital role as well, and that is why you see that insurance companies are now contracting work from independent entities, such as insurance brokers, insurance agents, insurance advisors, value and loss estimators, arbitrators, and accounting experts. Who is responsible? In light of the dire shortage of qualified candidates in Saudi Arabia, the big question is this: Who should be responsible for helping develop 34 Shawwal 1430 October 2009 COOPERATIVE HEALTH INSURANCE 35

19 Cover Story specialized training urgently required by the insurance market? Abu Al-Saud says the situation is so urgent and complex that it requires the concerted efforts of various institutions and agencies in the public and private sectors, including policy makers, regulators, insurance companies, as well as further attention from other public and private institutions. He also says that academic administrators should begin to include insurance in school curriculum, in order to create a generation able to meet market requirements. Education officials, he says, should also encourage universities and colleges to begin offering majors in insurance, as well as helping to encourage non-academic training centers to begin providing specialized training programs to cover all aspects of insurance. The role played by decision makers in Saudi Arabia is vital in enhancing the participation of associations and organizations in providing the most needed training, he said, adding that the steps that can take include encouraging the adoption of high standards of regulation, providing consumers with detailed statistics and information on products and services, and raising the level of available services in order to attract new talent. What can be done? Abu Al-Saud says insurance regulators should being to address the shortage by taking the following steps: First: Determine the professional qualifications and accreditation requirements needed for the insurance profession, including relevant educational certificates and professional qualifications available for the insurance sector Second: Raise the standards of existing training programs and develop new programs that are both internationally accredited and appropriate for the local market. Additionally, organize specialized training programs to educate consumers so that they can learn which existing or new insurance products might be right for them Addressing the shortage of qualified staff requires a concerted effort from various institutions and agencies in the public and private sectors, including health insurance companies, providers of health services, hospitals and clinics, the Chamber of Commerce, the Health Insurance Council, and the Saudi Council for Health Specialties, Dr AbdulKarim says. Third: Encourage companies to provide regular and rigorous internal training for staff members. Regulators could help develop and expand such programs by monitoring budgets for in-house training at Saudi Arabia s licensed insurance companies. Abu Al-Saud says insurance companies should institute constant training of their staff. Such instruction should take place internally for instance, by implementing monthly training by qualified instructors and also externally perhaps by sending staff to international training centers with topnotch programs. Training should cover all types of insurance, not only the one or two types that the employees are dealing with directly, in order to give them a bigger understanding of the insurance industry in all its aspects, he said. Who s already doing what? The Saudi Arabian Monetary Agency (SAMA) plays an active role in providing training through its Institute of Banking Team, which has recently developed a distinguished training program called the General Certificate in the Basics of Insurance. This new program helps train professional staff in insurance, and joins a lineup of other specialized training programs that also offer high levels of professionalism and efficiency. Recently, there was a joint effort between the Bahrain Institute of Banking and Finance and the Chartered Insurance Institute (CII), in cooperation with the Central Bank of Bahrain, to introduce a qualification certificate that would be recognized internationally. By design the course would emphasize the regional market s special needs. At the same time, regulators in neighboring countries are beginning to coordinate with international institutes such as CII to approve exams and requirements for training programs in their countries. I must say that the future of the insurance industry looks promising, Abu Al- Saud said. A vision for training Abdul Razak Idris, medical insurance official for the Saudi United Medical Insurance Company, is more cautious. Before focusing on training, we must know first what is the role and nature of work the trained medical staff will play, he said. Idris says that, currently, to obtain medical insurance, an employer must apply to an insurance company that offers health insurance, and that the company then issues a document for health insurance in accordance with the Council s regulations. The insurance company should also issue a document for cooperative health insurance that includes services agreed upon with the holder of the document. Mr. Idris says these services typically include medical examination, outpatient testing, medical analysis, and prescriptions. To fulfill its commitment to its customers, the insurance company contracts with hospitals, clinics and any other medical service providers that are deemed necessary. In accordance with the wishes of their owners, insurance companies usually issue many different kinds of insurance policies, often more than the minimum limits on insurance types specified by Saudi law. As a result, companies must have on staff qualified employees who can manage and understand the needs of both customers and service providers. It is the responsibility of the medical staff to make sure that medical services have been provided to patients by service providers, whether these treatments are appropriate or not, and whether such treatments are covered in the insurance policy or not, Idris said. Medical insurance requires qualified medical staff in order to understand, implement and guide patients toward the best treatment, he said. They should take into account the cost of such services, to prevent any abuse by service providers, such as conducting medical tests unrelated to the illness or the patient s condition. Idris discussed which areas require specialized training. General insurance and medical insurance in particular requires skills and competence, he said. Health insurance requires training in the areas of marketing, development, sales and customer service, reinsurance, accounting, accounting, administration, and underwriting and claims. As we see it, Idris said, there are many facets of the insurance industry that require extensive training. The human factor plays a key role in the success or failure of an insurance transaction. There are other areas of expertise that insurance companies wish to develop in employees, including how to show personal interest in the beneficiaries, how to understand procedures set Working in the insurance sector requires comprehensive technical, statistical and mathematical knowledge in different areas, including in business, management, and engineering, Abu Saud says. by insurance companies, how to distinguish between the different insurance plans and how to evaluate the selecting of hospitals and other service providers, as well as conducting follow-ups. But it s not just insurance companies that need to keep their staff trained, Idris says. Hospitals and clinics should also provide training to their own staff members, he says. Service providers contract with insurance companies to provide the required services according to the insurance policy. This contract requires the insurance company and the service provider to exert their utmost effort to provide the best medical care and services to the patient. How long shall training last? Idris says that initial professional training in insurance usually takes three months after the completion of a degree in insurance. It depends on the individual s ability to absorb the conditions, rules and fundamentals of the insurance industry, he said. Then he or she should focus on one or one type of service that we have mentioned earlier. After that they need practical training or an internship, which could include the possibility of shifting the trainee or the staff member to field training, so as to enable him or her to understand the relationship between the company and the employer, he said. 36 Shawwal 1430 October 2009 COOPERATIVE HEALTH INSURANCE 37

20 Program Riyadh Care Hospital Specialized medical services in accordance with highest ethical and humanitarian standards Centers of excellence 1. Joints and spine center In the Middle East, thousands of people suffer from or are afflicted with some form of musculoskeletal ailment. Until recently, patients requiring specialized joint and spine care traveled to Europe or America for treatment. The launch of the Joints & Spine Center at the Riyadh Care Hospital, however, has changed all that. The center, in collaboration with U.S. surgeons, now offers a solid clinical practice coupled with tangible research and high-quality services. Specialties a. Joint replacement This unit is able to perform the most up-todate techniques to fix internal or external fractures, allowing early mobilization and ambulation of injured patients. All types of joint replacement are performed, though the main focus of the team is on hips and knees. Replacement of these joints has offered a solution to a major problem facing patients in Saudi Arabia. b. Spine surgery This unit has the ability to deal with the most critical pathologies affecting the spine, including prolapsed discs, spine fractures, spine stenosis, degenerative instability, spine tumors and infections, spine deformities and scoliosis. c. Knee arthroscopy and sport injuries Extensive knee surgery is no longer the only solution for injured Saudis. All injuries at the Riyadh Care Hospital are diagnosed and procedures are now performed arthroscopically. Such procedures include diagnostic arthroscopy, arthroscopic Menisectomies, arthroscopic ligament reconstruction, arthroscopic shaving and With the help of an elite group of American surgeons and physicians we can treat a wide variety of disorders affecting the musculoskeletal system. Al- Howar says. debridement, in addition to treatments to shoulder, ankle and elbow injuries. The Saudi government, under the leadership of the Custodian of the two Holy Mosques, has always given the health sector its highest priority, in order to provide all citizens with an excellent standard of care using the most modern and advanced services available. Such governmental support has enabled great advances in the Kingdom s healthcare field, which is so well-known that neighboring countries citizens often come to Saudi Arabia to seek specialized care. The Riyadh Care Hospital, also known as the Old Insurance Hospital, was established in 1991 and is one of the nation s leading private hospitals. It is dedicated to providing quality services to patients, in accordance with international standards, and is equipped with advanced equipment and technology, together with a highly qualified medical staff. In addition to its standard medical departments and technical units, the hospital also features two highly specialized medical programs known as Centers of Excellence that are headed by responsible and competent members of the medical staff who are well qualified and experienced in their discipline. d. Pediatric orthopedics Correction of limb deformities Correction of congenital hip dislocation Bone-lengthening procedures The Joint and Spine Center, a joint U.S.- Saudi cooperation between Riyadh Care Hospital and U.S. surgeons, aims to return patients to normal function as quickly and safely as possible. It offers: The highest levels of U.S.-standard experience in bones, joints and spine surgeries The latest techniques in the field of surgery High success rates of surgical operations Fully equipped operating rooms The latest world-standard systems for sterilization and infection control The Director General of the Riyadh Care Hospital, Abdurrahman Al- Howar: The Joints and Spine Center has relieved many patients from the trouble of traveling outside the kingdom to undergo complicated surgeries. The Joints and Spine Center is poised to fill the gap that exists within the joint and spine field in the region, said Dr. 38 Shawwal 1430 October 2009 COOPERATIVE HEALTH INSURANCE 39