COOPERATIVE HEALTH INSURANCE

Transcription

1 COOPERATIVE HEALTH INSURANCE August 2008, Issue 2 Capital and Investment Insurance... The Potential for Revenues and a Promising Future In All Directions The Public and Health Insurance What are the Benefits? Incidents and Treatments not Covered by Health Insurance!

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3 Editor-in-Chief: Dr. Abdullah Bin Ibrahim Al-Sharif The Secretary General for the Cooperative Health Insurance Council Asst.Editor In Cief Mohammed S. Al Hussain The Asst. Gen.Secretary of Admin & Finance for the Cooperative Health Insurance Council The magazine s consultancy committee: Dr. Mansour Bin Nasser Al-Hawasi The Deputy Minister for executive affairs The member of the Cooperative Health Insurance Council Dr. Mousaa id Bin Mohammad Al-Salman Dean of the faculty of medicine, King Saud University The member of the Cooperative Health Insurance Council Mr. Sami Bin Abdullah Al-Moubarak General Director of the Bureau of Labor in Riyadh The member of the Cooperative Health Insurance Council The General Secretary for the Cooperative Health Insurance Council PO Box Riyadh Phone: Fax: Published on behalf of: The Cooperative Health Insurance Council Publisher: From the Editor As with other types of insurance, a variety of issues and subjects occupy the minds of those who wish to know more about health insurance. We, at the Health Insurance Magazine, are very much for addressing such issues from all sides, with respect for differences in opinion and viewpoints. This issue of the Cooperative Health Insurance Magazine explores a number of hot topics, and we ve sought out leading experts to help us and you understand the changes taking place in the Kingdom s insurance industry today. Our cover story for this issue is diseases that are not covered by the cooperative health insurance, a subject of particular importance which concerns us all. We have also collected a variety of viewpoints giving participants the freedom to express their own views, regardless of whether they are in agreement or disagreement with our own. Manager Director: Rabih Al-Amine [email protected] Editor-in-Chief: Mustafa Shehab [email protected] The editorial team at the Cooperative Health Insurance Magazine is always looking to canvas opinion and receive readers opinions and comments about the subject that we cover. In future issues of the magazine, we plan to have at least one page or more for readers to voice their view and to put forward questions for the insurance industry, as long as they are in the public s interest. Editors: Design: Ali Fawaz Hani Nadim Said Al-Husnia Amira Hmedeh Hussain Mohammed Al-Bakri From the Editor-in-Chief Distribution: PO Box: Riyadh 11372, Phone: [email protected] The using of all or a part of what s mentioned in this magazine without the publisher s permission faces legal guestioning August

4 News Qualified In All Directions Al Mana a: Insurance (6-12) for housekeepers and drivers is imminent! MedGulf Group (14-17) An Insurance Group with an extensive regional and international network In 1999, the collaborative Medical Insurance Law was promulgated as per Royal Decree No. M/10, dated 1/5/1420 H. In 2003, The Collaborative Medical Insurance Companies Controlling Law was issued as per Royal Decree No. M/23... Medical Insurance and (18-20) the Local Community. What are the benefits? The Edition s Case Social Responsibility Insurance Awareness (22-25) Building awareness in the Kingdom s latest industry Cooperative insurance has become one of the most talked about topics in Saudi society, particularly after the application of the Obligatory Insurance Law on both nationals and expatriates operating in the private sector... Corporate Social (26-27) Responsibility (CSR), A Win-Win for the Kingdom! Finance and Investment Capital and Investment (28-31) Medical Insurance in the Kingdom A promising future and unparalleled growth... 4 THE COOPERATIVE HEALTH INSURANCE

5 The Editions s Axis Incidents and Treatments (32-37) Not covered by Health Insurance! As the Kingdom s population becomes increasingly aware of insurance, questions have arisen surrounding what diseases are and are not covered by insurance schemes. To clarify what diseases and incidents insurance providers here in the Kingdom cover, and how healthcare is provided... Programme The Arab Shield Co. (38-40) Medical Insurance Programmes, Multiple Programmes & Varied Benefits Healthcare is surely a vital necessity for humanity across the world, where many people try to seek the best healthcare services to protect themselves from diseases as modern and recurrent diseases have considerably become widespread... The Edition s Guest Al-Subaiheen: The Saudi (42-45) Insurance Market is expected to grow to more than SR10 billion within the next five years... Technology Call Centers (46-48) The First Step to Success! As competition heats up in the economy, companies are looking towards solutions and services that will give them a competitive edge. Call Centers have emerged to fulfill this need, and they have become one of the latest tools companies use to distinguish themselves and provide a higher quality of service to current and potential clients... Life Style The world s most (50-52) exclusive coupe, the Bentley Brooklands, the classic choice for today s businessman Tourism and Travel Around the World Jerba Island France s Medical (54-57) (62-64) The Mediterranean s Insurance Programmes: Tourist Gem A Pivotal Foundation of the French A Combination of the Past and Social Security System Present Globally, countries develop The Greek hero of the Odyssey and tailor healthcare systems and his sailors lay on its crystal to suit their unique social, white sands enjoying the demographic, and economic gorgeous moderate climate and conditions.. warm sunrays... August

6 Al Mana a: Insurance for housekeepers and drivers is imminent! 986 Authorized Healthcare Providers Approved Compulsory enforcement of medical insurance for housekeepers, drivers, and others falling under the same category is imminent, Minister of Health Dr. Hamad bin Abdullah Al-Mana a stated recently. The Minister of Health said that following the endorsement of the Cooperative Health Insurance Council (CHIC) a group of specialists are now finalizing two proposals enforce this with sponsors. The first proposal involves providing these categories with insurance coverage from the Ministry of Health against a payment of SR 500; the second is to insure them for SR 1200 through local medical insurance providers for treatment by the private sector. The (CHIC) adopted three insurance documents: Family Insurance Policy, Old Age Insurance Policy and Individual Housekeepers Insurance Policy. All policies vary in terms of benefits and contributions, but they all apply fees for check-ups, diagnosis, treatment, medications, admission, surgery, one-day surgery, delivery, dental and gum treatment, and other preventive procedures as instructed by the Ministry of Health such as vaccinations, maternity and child care, and the costs incurred as to the repatriation of a corpse to his or her country of origin. The (CHIC) has approved up to 986 facilities as authorized healthcare providers, Dr. Al-Mana a added.< RSA Portal Enhances Online Insurance Service RSA, the International Insurance Company, has achieved record results thanks to the roll out of its new online insurance service, fasterquote.ae. The first and still one of the most comprehensive online insurance service in the region, RSA launched the website in March 2006, and redesigned the site recently to make online insurance services even more accessible to end users. The new service provides quotes and discounts on a wide variety of insurance services including insurance covering personal schemes, vehicle, travel, house, GRESS health, boats, pets, and sports. The website is part of a multi-channel strategy pursued by RSA to provide customers with the best possible service through call centers or directly through the web. RSA has also set up a phone line, where employees assist potential clients by walking them through using the internet portal or helping them directly over the phone. The RSA Group, which is active in more than 130 countries including Saudi Arabia, launched its new brand RSA first in Bahrain in a Broker Awards Ceremony that was held on April 30, 2008 and attended by more than 60 insurance brokers operating for the Group.< Salamah Insurance opens its head office in Riyadh Saudi Iyac for Cooperative Insurance (Salamah) has announced that, within the framework of its expansion strategy in the area, it has recently inaugurated its main office in the Saudi Capital of Riyadh. This will bring the company closer to its customers and allow it to promote its strategy in the Central Area; the heart of the commercial marketplace of the Kingdom. Speaking of the occasion, the Chairman of the Board of (Salamah) Dr. Salih Malaikah said: Salamah has become in a better place which allows it to offer quality services. Our Riyadh branch customers can now reach the company more conveniently which coincides with our policy in offering unrivaled services to our existing customers in addition to attracting new customers. The company General Manager Khalid Baraboud pointed out that the Riyadh main office shall operate side by side with ten branches of the company that cover various parts of the Kingdom. Furthermore, the company maintains an ambitious plan to open other branches in various cities to bring the total up to 15 by the end of the current year. He added that the company has appointed renowned agents to cover various areas of the Kingdom. Saudi Iyac for Cooperative Insurance (Salamah) is a provider of Islamic Sharia compliant insurance solutions. The first company of Salamah Group was established in Dubai in 1979 and thereafter it started to include a group of insurance and reinsurance companies offering services to customers around the Kingdom of Saudi Arabia, UAE, Egypt, Senegal, Algeria, and Tunisia. In addition, the company plans to expand its Sharia compliant services to include other countries.< 6 THE COOPERATIVE HEALTH INSURANCE

7 News Mandatory health insurance for saudi citizens to be enforced very soon! Dr. Abdullah Al-Shareef, Secretary-General of the Cooperative Health Insurance Council (CHIC), told Al-Hayat newspaper in an interview that: Around 1.5 million Saudi citizens working in the private sector will soon be subject to Cooperative Health Insurance following enforcement amongst expatriates. The enforcement of health insurance is to be conducted in three steps; the first will be with corporations employing 500 persons and above; the second is for corporations hiring over 100 persons and above, and finally for companies with fewer than 100 employees. Dr. Al-Shareef pointed out that although the number of those insured is on the increase, insurance companies can still absorb the increase in numbers. Dr. Al-Shareef said that expected limited rises in insurance policies on the long run, but that the performance of the local insurance market will need to be assessed in the long run. Dr. Al-Shareef stated his opinion that the insurance business in the Kingdom is suffering from a lack of high caliber insurance specialists, especially in niche areas and specialties. Around vacant job opportunities are expected to be filled by Saudi nationals. He also expected this number to double following full enforcement of the Cooperative Health Insurance on Saudi citizens working in the state and private sectors. The Secretary-General of The Cooperative Health Insurance Council (CHIC) pointed out that presently there are discussions among a number of sectors including The Institute of Administration and The Saudi Board for Health Specialties about proposing health insurance programmes to qualify more Saudi employees for employment and managerial roles in the Kingdom s insurance industry. Following the conclusion of a memorandum of understanding between his ministry and the Saneer Publicity Federation to launch the national antidiabetes campaign, entitled SALEEM, Dr. Abdullah Al-Mana a declared that the enforcement of the Compulsory Health Insurance shall be applicable to all citizens next year as directed by The Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz Al Saud. We have made good progress in enforcing this type of insurance on expatriates. Today 50 percent of those applicable are now covered, and the rest should be insured by the rest of the year, Dr. Al-Mana a said. Sources involved in the insurance sector have predicted that health insurance will rise markedly and will hit the SR 15 billion mark by the end of this year. By 2010 the health insurance market is expected to be worth some SR 30 billion within the next decade. Insurance experts claim that the enforcement of the Compulsory Health Insurance on locals and expatriates will drive growth and expansion in the domestic healthcare sector. The expansion of the Compulsory Insurance System to include Saudi nationals will create more than 7,000 job opportunities for Saudi citizens and free the government from its healthcare burden, estimated to be 8.6%, or SR 28 billion, of the annual budget last year alone.< A partnership between Waseel and Batabeely to provide pharmaceutical services management solutions A strategic joint venture has been agreed between Waseel E-Information Transmission Co., an e-services company, and Batabeely Co., a South African company specialized in drug insurance claims, to build the first e insurance claim management system in the Arabian Gulf. Mr. Waseem Khashukgi, CEO of Waseel said: Why have we embarked on this? We ve noticed many problems with current insurance claims practices, especially those related to drugs and pharmaceuticals which make up around 60% of total insurance claims in the industry. We believe that building an electronic system for processing drug-based claims can help cure this problem, thus save time and money and minimize mistakes by minimizing manual transactions. The system will adopt electronic dispensation for drugs and will provide files for each patient. In short, the system saves patients from misadministration of drugs that might be harmful to their health. Mr. Mike Collier, CEO of Batabeely reiterated his commitment to support and further the new venture aimed at developing the Gulf s healthcare sector through employing the Pro P.P.M technology approved by Mackison International Co. He also voiced his optimism about the potential for this venture by providing solutions required to promote and expand the GCC s healthcare sector. He said: the development of the healthcare system through the use of technology implies your country has a long-term vision for progress. < August

8 Medical Malpractice Insurance increases by 116% in 2008! Speaking to the media, NCCI officials have pointed to the sharp increase in medical malpractice cases over the last year, up over 116% over 2007 s numbers. Mr. Fahad Al-Husni, NCCI s Property & Accident Insurance CEO, attributed the massive rise to increasing awareness of the concept of insurance in medical fields due to the rising number of symposia and conferences held by Saudi healthcare providers on this issue. Al-Husni commended the response of doctors and practitioners to The Health Practitioners Law, which was issued two year ago. Article (41) of the Law requires that all doctors and dentists should procure insurance against professional malpractice. Al-Husni said: the resolution passed by the Saudi Board for Health Specialties makes providing doctors with medical licenses conditional on them obtaining malpractice insurance policies. The overwhelming response from doctors of all specialties to the Law has been positive, as it provides them with proper indemnifications for any malpractice up to SR 1 million. The system also speeds up malpracticebased claims and discourages any delays which may otherwise negatively affect both patients and doctors. We ve seen issues of detention or travel bans forced on doctors in the past, which has done neither the doctor nor the victims of such malpractices any good. In short, the Malpractice Insurance Policy has solved this complicated and delicate issue. Al-Husni pointed out that the malpractice insurance policy offered by NCCI provides a range of financial options ranging from SR 100,000 to SR 5,000,000. Indemnification limits can be increased depending on the customer s need. The prices of such insurance policies begin at SR 400 based on the medical specialty, claim constraints and the total limit of annual claims. Recently, the NCCI has participated in several local conferences about malpractices to familiarize doctors with malpractice insurance regulations, especially for doctors and specialties most vulnerable to malpractices, including those operating in the obstetrics, general surgery, internal medicine and pediatrics specialties.< 8 THE COOPERATIVE HEALTH INSURANCE Al-Khaznah Insurance Co. Acquires 15% of Sanad Cooperative Insurance Co. The UAE s Al-Khaznah Insurance Company has acquired of 15% of the Sanad Cooperative Insurance Company, estimated at over three million shares. The purchase gives Al-Khaznah two seats on the Board of Directors of Sanad Company as well as one position in Sanad s Executive Management. Sanad is expected to launch a host of cooperative insurance and reinsurance products in the Saudi market. The new acquisition forms part of Al-Khaznah s strategy to enter the Saudi market. With indicators suggesting that the Kingdom s insurance sector is set to boom, partly due to the enforcement of compulsory cooperative insurance on the country s seven million expatriates as well as automobiles. Experts estimate that insurance investments this year reached SR 7 billion; this number is set to rise to SR 15 billion next year and SR 30 billion by the next decade. In addition, insurance premiums should rise from SR 150 to SR 450 per capita. Sanad Cooperative Insurance Co. was founded as a joint stock corporation in July 2007 with a capital of SR 200 million. Sanad, which is located in Riyadh, was listed on the Saudi bourse on July 21st. Al-Khaznah Insurance Co. was established in 1996 in Abu Dhabi as a holding company with a capital of AED 380 million.< Health insurance call centres and services to be established Following the 64th meeting of the Cooperative Health Insurance Council (CHIC) presided by the Minister of Health, President of the (CHIC) Dr. Hamad Al-Mana a, Dr. Abdullah Al-Shareef, Secretary General of the Cooperative Medical Insurance Council told the press that: very soon we will be launching call-center health insurance claim enquiry service keep both expatriates and Saudi nationals informed and updated on the ins and outs of health insurance laws and solve any problems resulting from misapplications of these laws. A number of issues were discussed in the meeting, particularly those related to the proper enforcement of the Cooperative Insurance Law, according to Saudi newspaper of Al-Watan. Dr. Al-Shareef explained: The Council reviewed the results of our cooperation with the World Bank and our desire to utilize the Bank s expertise in various fields related to the cooperative insurance industry. Dr. Al-Shareef inaugurated the Council s new web site and reviewed the Old Age Insurance Policy and other improvements on the site. The meetings were convened to discuss how to implement these amendments to the insurance laws. The Cooperative Health Insurance Law was introduced in 2006, and to date over four million people have taken out insurance policies. 0 The Cooperative Health Insurance Law was first put in force on 19/6/1427 H. The number of insured as of that date is around 4 millions.<!

9 Star employee award Mr. Abdullah Al-Buraik was awarded the Star Employee honour for the first quarter of 1429H. Al-Buraik is an employee of The General Secretariat of the Cooperative Health Insurance Council. The award was awarded to Al-Buraik by a special committee for his dedication and sincere efforts. Al-Buraik was delivered a letter of recognition during a party held for this occasion. The party was attended by Dr. Abdullah Al-Shareef, Secretary-General of the Council, and other senior officials.< Saudi Reinsurance Market worth SR 2.6 billion In a press conference held recently, Mr. Musa Al-Rubai an Chairman of the Board of the Saudi Reinsurance Co. (E adah) estimated the Kingdom s reinsurance market to be worth SR 2.6 billion, and that of the GCC as a whole to be approximately SR 12 billion. Al-Rubai an explained that the company, currently undergoing restructuring, will be looking to penetrate a number of markets in the GCC, and also expressed his opinion that the Kingdom s insurance sector will undergo a wave of consolidation over the coming three years. He added that consolidation would benefit consumers as companies leveraging off larger economies of scale would be able to offer better services at lower costs. However, Al-Rubai an claimed that E adah would be safe from any takeover due to its high market capitalization. Speaking at the press conference, Mr. Taher M. Al-Dabbagh, CEO of the Saudi Hollandi Financial Company said: We have signed six agreements so far with companies going IPO, and we re expecting to announce up to three more for IPO in 2008, including Al-Hokair, Sahara, and Huta. Mr. Nehad I. Taleb, CEO of the Saudi Reinsurance Co. (E adah) added that: E adah s capital is estimated to be worth SR one billion, broken down into 100 million shares with a nominal value of SR 10 per share. Around 40 million shares amounting to SR 400 million were announced for IPO. < News Extensive Public Support for the Enforcement of the Health Insurance Law A survey conducted recently in the Kingdom has revealed that the vast majority of the public understand and support the enforcement of health insurance for Saudi nationals. Those particularly in favour of the legislation include university female workers, private sector employees, and government workers. Conducted by Col. Saleh Ibrahim Al-Tasan, a PhD holder in hospital management and health insurance, all the participants called for expanding insurance coverage to incorporate new services. Those interviewed called upon the insurance industry to invest in building their capabilities and resources, hire more specialized manpower, provide more specialized products, and invest more capital to offer better insurance programmes and healthcare. The participants also called for affordable insurance installments, insurance products sold through multiple channels, a superior quality of quality, and more proactive customer care. They proposed health insurance covering of all emergency cases, postnatal follow-up, dental treatment, eye check-ups and easier access to hospitals. The survey offered a number of recommendations, including forming a committee staffed by high ranking representatives from the Ministries of Health, Defense, the National Guard, specialist healthcare facilities and the private sector to develop the Saudi healthcare system, ensure better usage of public resources, conduct research, develop IT systems, and improve the quality of health services. It also recommended that the Ministry of Labor should move ahead Saudization in the insurance sector and hire more trained Saudi graduates. The survey recommended an insurance policy which would include basic medical services like diagnosis, medication, preventive procedures, lab tests, x-rays, and hospitalization. < August

10 35,000 Job opportunities to be created by the insurance sector over the next decade Dr. Al-Eesa proposed setting up an Institute of Insurance Research to provide specialized research on how the global insurance industry can overcome local challenges in the Saudi market to fuel growth. Other goals of the proposed Institute include enhancing the legal environment for the insurance industry and creating more awareness of the importance of insurance among the public in general. Al Yamama College is the first Saudi college that offers a Bachelor degree in Insurance. The College is expected to graduate around 15 students holding Bachelor degree in Insurance this year. Once Al-Yamama College is transformed to a university, it will look to develop the Institute of Insurance Research, a project estimated to be worth over SR 10 million. < The First Meeting of Insurance Company Human Resources managers was held in Al-Yamama College last month, and was attended by more than 35 Saudi, Arab and International insurance companies. The meeting stated that the boom in the insurance sector should be attributed to the country s rapid economic growth that requires adequate insurance coverage to reduce trade-related risks, as well as an improvement in the regulatory environment as well as competition which has introduced more innovative products. The meeting was introduced by speech from the Dean of Al-Yamama College, Dr. Ahmad Al-Eesa. Dr Al-Eesa told the audience that the insurance sector will create up to job opportunities over the next decade. Dr. Al-Eesa adduced a quick review of the history of Saudi insurance industry, dating back to when the first insurance products were sanctioned by the Late King Abdulaziz on goods imported from abroad in 1350 H. In 1397 H, a religious opinion (Fatwa) was issued by the Supreme Scholars Panel permitting the cooperative insurance system as an alternative for traditional commercial activities. In 1405 H, the NCCI was founded as per a Royal Decree as a Saudi joint stock company operating in the insurance industry in conformity with the principles of cooperative insurance. Dr. Al-Eesa said: The insurance business is a vital part of the economy in countries such as South Korea, Japan, Switzerland, USA, Germany, and Italy. He also talked about Al-Yamama becoming the first Saudi higher educational establishment to offer an insurance degree. Speaking about the need to provide the local insurance market with trained insurance professionals, Dr. Al-Eesa focused on the importance of the relationship between the insurance sector and higher education. Dr. Al-Eesa said: Al Yamama College is trying to hire high profile teaching staff in the insurance specialty who can serve on think tanks for the local insurance sector and to localize the insurance industry to the needs of Saudi community. < Chinese insurance sector worth Yuan 242 billion Recent research revealed that the Chinese insurance sector has grown to SR billion as of January Data released by the Chinese Regulation Committee and broadcast by the Chinese News Agency showed that the Chinese insurance sector accrues over Yuan billion Yuan 28.2 billion in property insurance, Yuan 70.8 billion in life insurance, Yuan 4.7 billion in medical insurance and Yuan 1.9 billion in accident insurance. The Chinese insurance sector awarded insurance claims amounting to Yuan 10.4 billion for property insurance, Yuan 18.3 billion for life insurance, Yuan 4.1 billion for medical insurance and Yuan 695 billion for accident insurance. A highranking Chinese official added: The Chinese government accrued insurance installments of Yuan 242 billion from January through to October China s interest rate was 10.87% during the same period. < 10 THE COOPERATIVE HEALTH INSURANCE

11 Sheikh Al-Mane a: Both Commercial and Cooperative Insurance are halal Member of the Supreme Scholars Panel Sheikh Abdullah bin Suleiman Al- Mane a reaffirmed his view that: there is no difference between commercial and cooperative insurance, and that both kinds of insurance are permissible. Sheikh Al-Mane a, head and board member of a number of major corporations, expressed his opinion after critics dismissed his notion that commercial and cooperative insurances are similar if not one in the same in a lecture delivered to the Riyadh Chamber of Commerce & Industry. Wading into the issue which has been debated by scholars and other religious figures, Sheikh Al-Mane a said: The opinions of others are not divine revelation. It represents their own Ijtihad, or personal religious opinion. He reaffirmed his viewpoint as reported by the local press and confirmed that his opinions may be adopted by anyone without any doubt. Sheikh Al-Mane a rejected the argument that insurance is in opposition to the theory of with God s destiny, as reliance on God is required and as instructed according to Islamic teachings. Insurance is taken as an approach to maintain property. Sheikh Al-Mane a affirmed that, there is no difference between commercial and cooperative insurance as they both share the same five elements: insured, insurer, installment, the location insured and remunerations. Both types of insurance are alike in terms of application, and all parties involved can benefit from them. He also focused on insurance as a way to preserve and maintain property and personal funds as a Muslim is requested to seek all legitimate ways to accomplish this objective and exclude illegal activities such as usury, drugs and arms dealing, and money laundering. Sheikh Al-Mane a emphasized that: Money should not be hoarded by the rich, and that Zakat and donations should be offered for the needy and the less privileged people. There are other ways that preserve money such as mortgages, tourist checks, warranty, credit cards, and insurance. Replying to the argument that cooperative News insurance is personalized insurance Sheikh Al-Mane a said: That is not true. What we are talking about is unspecified cooperation. For example, bread can not be sold to a customer unless it is prepared, beginning with the growing of wheat, to transporting the wheat, milling, packaging, and then its sale. This implies that such cooperation in making bread was unintentional as everyone works on a specific task, paying no attention to the next phase. To answer a question about the importance of insurance, Sheikh Al-Mane a said: For example, security is a societal endeavor. The government allocates huge amounts to provide security to people and property. Similarly, insurance policies are contracted to offer peace of mind and comfort to people and get their property insured against loss, fire, robbery, and other dangers. He stressed his opinion that, cooperative insurance should be independent from financial corporations that offer the schemes. Insurance companies do not rely on insurance installments only but also on other financial and investment operations. This does not embody the common feature of insurance. Thus, insurance should be independent from the financial character of corporations. In response to a question about insurance contradicting Allah s will, Sheikh Al-Mane a said: Reliance on Allah is required and instructed under Islamic teachings and we have to use all legitimate means to fulfill this endeavor. Reliance on Allah does not conflict with utilizing proper and legal means to achieve this goal. For example, the failure of a SR 100 million project shall be catastrophic to owners and shareholders in the absence of insurance. However, when it is insured, owners and shareholders can receive proper reimbursements and resume work anew. As for me, I legalize brokering and subscribing in local insurance companies if they run non-insurance investments according to Islamic rules. < August

12 Insurex 2008: Satisfying Insurance Leaders Demands Dr. Al-Shareef: Penalties will be imposed for delayed application of the insurance programme Focusing on the challenges faced by the region s insurance sector, including the skills shortage, corporate governance, and risk management approaches, Insurex 2008 gathered together over 40 GCC-based insurance firms in Dubai recently. The conference tackled various issues affecting the insurance sector such as the future of the industry in the GCC post-gat, the GCC insurance and reinsurance markets, rigorous claim processing, GCC insurance investment, and consolidation in the GCC following the global economic downturn. Over a two day period, the Conference discussed lessons learnt from insurance firms in the Middle East region looking to introduce and develop a variety of insurance schemes, as well as issues such as regional medical practices, sector, state medical policies, and how the government is looking to enforce compulsory insurance in Dubai. Dr. Abdullah Al-Shareef, Secretary-General of the Cooperative Medical Insurance Council shared his thoughts with the audience about how much progress the Saudi insurance sector has made following the introduction and the implementation of the Compulsory Insurance Programme: Several measures have been taken to enforce this law, including the non-renewal of residence permits without a valid insurance policy and fining sponsors and employers who do not insure employees. The first phase of this Law covers all expatriates, six million people in total. The final phase of this programme shall extend to Health services 23.6% 57.3% 19.1% Private Sector Ministry of Health Other 19% 57% Chart 1 24% all nationalities, including Saudi citizens working in the private sector. During the Conference, a workshop was organized by Waseel about electronic insurance systems and the adoption of standards for pharmaceutical claims which account for 60% of all medical insurance claims. Mr. Saleh Al-Omair, CEO of Saudi Solidarity Company spoke to the audience about the Kingdom s experience in compulsory medical insurance and how the sector looks moving forward. The highlight of the Conference was a discussion between national insurance industries on how to collaborate to create a pan-gcc industry, and face common issues such as building awareness among the public, promoting legislation favourable to the insurance sector, and developing local talent. With invitees from insurance companies, insurance union representatives, as well as public officials responsible for regulating the insurance sector across the Middle East and North Africa, Insurex was the event of the year for the insurance industry. < 12 THE COOPERATIVE HEALTH INSURANCE

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14 نشرة الا صدار طرح (٢٠ ٠٠٠ ٠٠٠) عشرين مليون سهم عادي تمثل ٢٥ من را س مال شركة المتوسط والخليج للتا مين وا عادة التا مين التعاوني ميدغلف وذلك من خلال طرحها للاكتتاب العام بسعر( ١٠ ) عشرة ريالات سعودية للسهم ال شركة المتوسط و الخليج للتا مين و ا عادة التا مين التعاوني- ميدغلف شركة مساهمة سعودية (تحت التا سيس) بموجب المرسوم الملكي رقم م/ ٦٠ وتاريخ ١٤٢٧/٩/١٨ ه وقرار مجلس الوزراء رقم ٢٣٣ وتاريخ ٢٧/٩/١٦ فترة الاكتتاب من يوم ١٤٢٨/١/٢٩ ه ) الموافق /٢٠٠٧ /٢ ١٧ م) ا لى يوم /١٤٢٨ ٢/٨ ه (الموافق ٢٠٠٧/٢/٢٦ م) شركة المتوسط والخليج للتا مين وا عادة التا مين التعاوني -ميدغلف(يشار ا ليها فيما بعد ب"الشركة" ا و "ميدغلف السعودية") هي شركة مساهمة سعود التا سيس بموجب قرار مجلس الوزراء رقم (٢٣٣) تاريخ ١٤٢٧/٩/١٦ ه الموافق ٢٠٠٦/١٠/٩ م. والمرسوم الملكي رقم (م/ ٦٠ ) الصادر بتاريخ ١٤٢٧/٩/١٨ ه الموافق ١٠/١١ يبلغ را س مال الشركة (٨٠٠ ٠٠٠ ٠٠٠) ثمانماي ة مليون ريال سعودي مقسم ا لى (٨٠ ٠٠٠ ٠٠٠) ثمانين مليون سهم بقيمة اسمية قدرها (١٠) عشرة ريالات للسه انتهاء الاكتتاب (كما هو موضح ا دناه) وانعقاد الجمعية العامة التا سيسية للشركة. سوف يتم تقديم طلب ا لى وزير التجارة والصناعة لا علان تا سيس الشركة. الشركة مو سسة من تاريخ صدور القرار الوزاري با علان تا سيسها. سيكون الطرح الا ولي للاكتتاب العام في الشركة ("الاكتتاب" ا و "الاكتتاب العام") لعدد (٢٠ ٠٠٠ ٠٠٠ )عشرين مليون سهم ("ا سهم الاكتتاب" و كل منها اكتتاب") وبقيمة اسمية للسهم قدرها (١٠) عشرة ريالات سعودية. تمثل بمجملها نسبة ٢٥ من را س مال الشركة. يقتصر الاكتتاب على الا شخاص ال An Insurance Group with an extensive regional and قبل المساهمين المو سسين بشكل ري يسي في عملية الاستحواذ على الحقيبة التا مينية السعودية المملوكة حاليا لميدغلف البحرين. international network Group الطبيعيين (ويشار ا ليهم مجتمعين ب"المكتتبين" ومنفردين ب "المكتتب"). كما يجوز للمرا ة السعودية المطلقة ا و الا رملة التي لها ا ولاد قصر من زوج غير س تكتتب با سماي هم لصالحها. وسيتم استخدام صافي متحصلات الاكتتاب بعد خصم مصاريف ما قبل التشغيل بما فيها مصاريف الاكتتاب ورا س المال المد قبل اتمام الاكتتاب العام اكتتب كل من المساهمين المو سسين للشركة الواردة ا سماو هم في الصفحة (ع) ويشار ا ليهم مجتمعين ب"المساهمين المو سسين" بما م (٦٠ ٠٠٠ ٠٠٠) ستون مليون سهم تمثل نسبة ٧٥ من ا جمالي را س مال الشركة وبالتالي سيحتفظون بحصة مسيطرة فيها. يجب على كل مكتتب با سهم الاكتتاب (يشار ا ليه ب " المكتتب" ومجتمعين ب" المكتتبين") الاكتتاب ب( ٥٠ ) خمسين سهم كحد ا دنى كما ا ن الحد الا ق مكتتب هو (١٠٠ ٠٠٠) ماي ة ا لف سهم. ا ن الحد الا دنى للتخصيص هو (٥٠) خمسون سهم لكل مكتتب وسيتم تخصيص ما يتبقى من الا سهم المطروحة للاك وجدت) على ا ساس تناسبي بناء على نسبة ما طلبه كل مكتتب ا لى ا جمالي الا سهم المطلوب الاكتتاب فيها. وا ذا تجاوز عدد المكتتبين (٤٠٠ ٠٠٠) ا ربعماي ة ا لف فا ن الشركة لا تضمن الحد الا دنى للتخصيص وسيتم التخصيص بالتساوي على عدد المكتتبين. وسوف يتم ا عادة فاي ض الاكتتاب (ا ن وجد) ا لى المكتتبين دون ا ي ا و استقطاعات من البنوك المستلمة. وسيتم الا علان عن عملية التخصيص ورد الفاي ض في موعد ا قصاه يوم ١٤٢٨/٢/١٤ ه (الموافق ٢٠٠٧/٣/٤ م) (راجع قسم وتعليمات الاكتتاب التخصيص ورد الفاي ض"). سوف تكون ا سهم الشركة من في ة واحدة تضم ا سهم المساهمين المو سسين وا سهم الاكتتاب ولا يعطى ا ي مساهم حقوق تصويت تفضيلية حيث يعطي ك حامله الحق في صوت واحد. ويحق لكل مساهم يمتلك (٢٠) عشرين سهما على الا قل حضور اجتماعات الجمعية العامة ("اجتماع الجمعية العامة") والتصوي وستستحق الا سهم المطروحة للاكتتاب ا ية ا رباح تعلنها الشركة بعد بداية فترة الاكتتاب والسنوات المالية التي تليها. (راجع قسم " سياسة توزيع الا رباح"). ليس هناك سوق لا سهم الشركة سواء داخل المملكة العربية السعودية ("المملكة") ا و ا ي مكان ا خر قبل طرحها للاكتتاب العام. وقد تقدمت الشركة بطل السوق المالية بالمملكة ("الهيي ة") لتسجيل الا سهم في القاي مة الرسمية وتمت الموافقة على نشرة الا صدار هذه وتم استيفاء كافة المستندات المو يدة التي الهيي ة. وقد تم الحصول على جميع الموافقات الرسمية للقيام بعملية طرح الا سهم. ومن المتوقع ا ن يبدا تداول الا سهم في السوق في وقت قريب بعد الانتهاء م تخصيص الا سهم وصدور القرار الوزاري با علان تا سيس الشركة (راجع قسم "تواريخ مهمة للمكتتبين") وسيسمح لمواطني المملكة العربية السعودية وللشركات وصناديق الاستثمار السعودية بالتداول في الا سهم بعد بداية تداول الا سهم في السوق. يجب دراسة قسمي ا شعار "هام" و "عوامل اخملاطرة" الواردين في نشرة الاصدار هذه قبل اتخاذ قرار الاستثمار في ا سهم الاكتتاب بموجب هذه النشرة. المستشار المالي مدير الاكتتاب متعهدو التغطية البنوك المستلمة تحتوي نشرة الا صدار هذه على معلومات تم تقديمها حسب متطلبات قواعد التسجيل والا دراج الصادرة عن هيي ة السوق المالية بالمملكة العربية السعودية (والم ب"الهيي ة") ويتحمل ا عضاء مجلس الا دارة اللذين تظهر ا سماو هم في الصفحة (د) مجتمعين ومنفردين كامل المسو ولية عن دقة المعلومات الواردة في نشرة هذه ويو كدون حسب علمهم واعتقادهم بعد ا جراء جميع الدراسات الممكنة وا لى الحد المعقول ا نه لا توجد ا ي وقاي ع ا خرى يمكن ا ن يو دي عدم تضمينها في الن جعل ا ي ا فادة واردة فيها مضللة. ولا تتحمل الهيي ة والسوق المالية السعودية ا ي مسو ولية عن محتويات هذه النشرة ولا تعطي ا ي تا كيدات تتعلق بدقتها ا و ا وتخلي نفسها صراحة من ا ي مسو ولية مهما كانت عن ا ي خسارة تنتج عما ورد في هذه النشرة ا و عن الاعتماد على ا ي جزء منها. صدرت هذه النشرة بتاريخ ١٤٢٨ ١/١٥/ ه (الموافق ٢/٣/ In 1999, the collaborative Medical Insurance Law was promulgated as per Royal Decree No. M/10, dated 1/5/1420 H. In 2003, The Collaborative Medical Insurance Companies Controlling Law was issued as per Royal Decree No. M/23, dated 2/6/1424 and its Executive Regulation allowing for many local insurance companies to be licensed. A new era for the insurance business in the Kingdom began to take shape with the formation of many insurance firms according to the above laws. The Collaborative Medical Insurance Magazine aims to tackle this booming sector. In the firs issue of the Magazine, we will review one of the most reputable companies operating in this vital sector, the Saudi MedGulf Group. 14 THE COOPERATIVE HEALTH INSURANCE

15 Qualified Saudi MedGulf Group Saudi MedGulf Group is a Saudi Joint Stock company formed in October, 2006 as per a Royal Decree and the Cooperative Medical Insurance Companies Monitoring Law as a cooperative insurance company. The Company s capital is SR 800 million divided into 80 million shares. The founders signed up for 60 million shares constituting 75% of the capital to be deposited in an account opened with the Saudi Investment Bank and 20 Million shares were announced for IPO at SR 10 per share. As the new joint venture was duly formed and licensed by the Saudi Arabian Monetary Agency (SAMA) to embark upon the collaborative insurance business home and abroad, Saudi MedGulf Group began to offer all types of insurance solutions to clients including vehicle insurance, third party responsibility insurance, property insurance, marine insurance, air cargo insurance, energy insurance, construction and engineering insurance and medical insurance together with saving and protection insurance. Over 553 employees work in the insurance department, Insurance Brokers Department, and Claim Processing Unit at MedGulf. Company Profile MedGulf Group launched its first operations in Bahrain in 1997 as offshore entity, and began to offer insurance solutions in Saudi Arabia through Al- Sameya Trading Est. (now known as Al- Samyah Co.) using an exclusive agency contract. In 1997, the Group acquired Strikers Insurance & Reinsurance Co. in Lebanon and Asia Assistance Claim Management and Medical Networks Co. (where the Group s total capital never exceeded US$5 Million). In 1998, Al- Azezyya Investment Co. presided by HRH Prince Al-Waleed bin Talal bin Abdulaziz Al Saud and the Mediterranean Group owned by the heirs of Rafiq Al-Hariri invested in MedGulf, raising the capital to US$15 million. Furthermore, the Group acquired the Arab International Insurance Co. of Lebanon to form MedGulf Holding Co. in Lebanon. In 1999, both Addison Bradley International of Lebanon and Addison Bradley & Co. of UK (insurance brokers) joined the MedGulf Group. MedGulf s soaring growth continued through a series of acquisitions of Arc Insurance Co. of Cyprus, and Medical Express Co. registered in the British Jersey Islands (changed later to MediVisa Co. in 2000). In 2002, MedGulf Group acquired 4% of OmniLife of UK. In 2003, Addison Bradley Arabia was formed in Bahrain and opened a branch in Dubai. The MedGulf Group was licensed to duly operate in the insurance business in Bahrain. The Group s growth reinvested profits and its capital in Lebanon reached SAR78 million. Bahrain MedGulf s total equity rose to some SAR 264 Million. In 2004, MedGulf approached SAMA for a business license in Saudi Arabia. In 2006, MedGulf s ownership in OmniLife Co. was raised to 62.4%, and allowed MedGulf to managing OmniLife Co. Branches of Addison Bradley Arabia and MediVisa were also established in Jordan, where MedGulf was fully licensed in both Jordan and KSA. MedGulf entered the Turkish insurance market after forming Addison Securta Hezmetlery Co. in Istanbul. In 2006, total insurance premiums accrued by MedGulf rose to SAR 773 million. Mission and Strategy The Group has looked to build a solid client base in the Kingdom through its strategy of providing real benefits to people in acceptance with socioeconomic and Islamic principles. With the Kingdom s insurance business rapidly maturing and still below its potential relative to GDP, the Saudi insurance << August

16 market offers a real opportunity for growth and expansion. Some Group officials claim that: The absence of governing insurance regulations in the past caused many to hold a bad impression about the insurance sector. MedGulf holds itself and counterparts responsible for correcting such bad impressions through adopting a code of ethics and rules to act upon them, taking into account that the restrictions and regulations set forth by SAMA have considerably helped in this regard. Activities Over the past few years, the Group has rapidly established itself in the insurance world, and has become one of the largest insurance provider in the region and internationally. MedGulf Group is engaged in high profile business ties with major global banks and corporations such as Saudi Oger Holding Co. Kingdom Holding Co. the Saudi Investment Bank, etc. These partners hold huge portfolios and reserves as well as commercial and residential facilities and are involved in construction and industrial projects both at home and abroad. In fact, the insurance polices subscribed by such partners yield constant revenues. Upon the Group s acquisition of Bahrain MedGulf, the Group had to extend insurance coverage to the above partners. The Group s expansion has been significantly helped in developing its experience and international expansion by its past agency agreement with Al Samyah Trading Co. Assisted by Al Samyah Trading Co., MedGulf Group has trained countless fresh Saudi graduates at specialized local and Gulf training centers to produce a new generation of leaders for the Group s operations. Wide-Flung Geographic Presence Further to contracting a network of brokers and agents, the Group is now trying to extend sales offices to regions not currently served by the insurance sector as well as raising services levels for clients across the Kingdom. MedGulf Co. is the Kingdom s first insurance company under formation in terms of capital, and the second in terms of portfolio volume. This distinguished financial standing has qualified the Group to enter into high payoff reinsurance agreements with reputable international corporations, allowed MedGulf to manage highrevenue contracts, and keep the firm from fluctuations faced by similar insurance companies caused by endless claims, high cost indemnities, abrupt reinsurance markets falls, and force majures-related risks. MedGulf Co. runs an extended network comprising around 350 medical service providers, eighty five of which are reputable hospitals scattered the Kingdom, including in remote areas. In addition, MedGulf has appointed around 28 representatives in major medical facilities to provide patients insured with immediate medical services. This massive network could offer the Group with unprecedented medical compensations with major healthcare providers. The Group s regional and international presence in Bahrain, Jordan, UAE, Turkey, and UK together with its exclusive contractual business bonds with global major corporations have afforded it with a constant competitive edge and greater capability to access more clients in other parts of the world. Insurance Services As Saudi MedGulf is a substantial part of a business group that is MedGulf, the company is able to offer a wide variety of services connected to insurance, reinsurance, brokerage, protection and savings insurance, insurance solutions, risk management and claim processing. However, the most important insurance offered by MedGulf is medical, where it affords full medical insurance programmes covering medicines, treatment, and other healthcare programs management. Insurance policies provided by MedGulf covers primary care and outpatient clinics, diagnosis services, surgical and pharmaceutical services, and other options connected to pregnancy and postnatal follow-ups, dental and eye treatment. The gradual application of the Obligatory Medical Insurance Law has enabled MedGulf to record good growth rate. As for vehicle insurance, MedGulf offers the Sayyar Programme as an integral insurance coverage programme combing all vehicle insurance benefits, passenger insurance, and third party responsibility insurance. The Group expects a huge rise in the vehicle insurance sector as the government enacts and put the Obligatory Vehicle Law into force. The insurance package offered by MedGulf covers all loss connected to fire, lightening, combustion, plane or car crush, earthquakes, commotion, strike, damage caused by civil violence, tornados, floods, etc. The Group s coverage limits may expand to touch other risks related to the removal of debris, rent loss insurance, firefighting operations, work stoppages, sabotage, and terrorism. The property insurance afforded by MedGulf includes damages and faults to residential and commercial buildings, contents of buildings, and other risk resulted from or connected to robbery and forced entry. As for cargo and ship insurance, the scheme comprises two basic models; merchandise insurance and ship insurance. In general, merchandise insurance is applicable to cargos transported overland, by sea and by air, where the insurance is contracted for the risks coming from loss, damage, and short shipments. Shipment insurance tackles the risks 16 THE COOPERATIVE HEALTH INSURANCE

17 Qualified connected to technical breakdown, piracy, sinking and any other risks faced by ships in high seas. The engineering insurance provided by MedGulf covers all risks befallen to buildings, constructions, mechanical, electronic, or electrical breakdowns, etc. The basic types included in the engineering insurance are contractors insurance, constructions insurance, faulty machinery insurance, and loss of profit insurance. Air insurance includes airplane insurance and any commitment resulting thereof such as but not limited to war insurance, personal incidence insurance, loss of pilot s license insurance, where pilots can claim their license back once withdrawn for disease or physical affection. The air insurance is also applicable on airport owners and operators, where MedGulf offers insurance in the form of reinsurance contracts with international reinsurance companies. This model of insurance is expected to rise with licensing private airline corporations in the Kingdom. Energy insurance tackles oil and petrochemical industries, oilrigs, and storage facilities. This type of insurance holds high growth potential as the Kingdom has recently upgraded refining and production capabilities, and launched new wide-scale projects. Protection and savings insurance comprises the consequences related to death, partial, complete, or ad interim inability and other contracts where the insurer pays installments including his savings in future date in return for contributions disbursed to the insured. Partners Further to Saudi MedGulf s reliance on Bahrain MedGulf to provide expertise and technical infrastructure, especially in early years of foundation, Saudi MedGulf has close business ties with Al Samiayh Trading Co., Nejm Co., and MediVesa together with other insurance agents and brokers to access the widest geography for its clients and customers. MedGulf s success is based on its local, regional, and international presence comprising many affiliates, each of which operates specialized or supporting activities. The major affiliates are: A. The Mediterranean and Gulf Insurance & Reinsurance Co. (MedGulf) in Bahrain, Lebanon, and Jordan. B. Addison Bradley which runs the insurance brokerage business in Lebanon, UK, Bahrain, Dubai, and Jordan. C. MediVisa Claim Management and Medical Network Co. in Dubai, Bahrain, and Jordan. D. OminLife Co. of UK.< August

18 Medical Insurance and the Local Public. What are the benefits? Prepared by: Hani Nadeem Most advanced societies aspire to a system which can deliver social, medical and educational benefits in equal measure, a state system which can cater to all its citizens. In today s world, the success of any government is measured by the quality of social and educational benefits it offers to its citizens. The private sector has followed suit, and today s businesses offer their employees similar medical and social benefits in a bid to increase productivity and prove their social corporate responsibility to the community. With the setup of the first collaborative medical insurance system in the Kingdom of Saudi Arabia in 1920, the Collaborative Medical Insurance Council was tasked with creating and developing a culture of medical insurance amongst Saudi nationals.the Council was also responsible for monitoring the system s implementation and insurance firms active in the Saudi market. Creating insurance awareness is one of the biggest challenges facing national lawmakers and private insurance service providers today. The Kingdom s insurance industry is taking its first steps in developing comprehensive national insurance solutions that can provide full coverage at prices affordable for the population. Over the past few decades, the Kingdom of Saudi Arabic has scored highly in almost every aspect of economic and social development. One of the best examples of Saudi s progress is in the healthcare sector; the country s medical services are the best in the world and can be compared positively to healthcare systems in the Western world. Similarly, the number of people insured has grown as insurance providers increase the Al Mubarak: The progress achieved by governments is measured by the quality of healthcare and educational services they provide to their people. number of schemes available to Saudi nationals and expatriates, who are now very much aware of the need for comprehensive medical coverage. Achieving these goals, of creating an understanding as to the need for insurance and its benefits and ensuring that healthcare is available to all, has led the Collaborative Medical Insurance Council work hand in hand with the Kingdom s Ministry of Health and private insurance corporations to educate the public through media outreach and public relations. The Collaborative Insurance Magazine invited Mr. Sami Abdullah Al Mubarak, General Manager of Riyadh s Labor Office and a Member of the Collaborative Medical Insurance Council and Mr. Naser Sultan Al Sobaie, Vice Chairman of Al Mowasa Medical Services Co. and also a Member of the Collaborative Medical Insurance Council, to discuss how far we ve come in meeting these targets and how much more has yet to be done. To begin, Al Mubarak was asked about how the concept of medical insurance has changed in the local community and perceived improvements to the system following the adoption of the medical 18 THE COOPERATIVE HEALTH INSURANCE

19 From All Directions The positive aspects of medical insurance are immense, as public health is a top priority for our government, which has tried its best lower the cost of healthcare and make it affordable to all. insurance law recently. Al Mubarak said: The positive aspects of medical insurance are immense, as public health is a top priority for our government, which has tried its best lower the cost of healthcare and make it affordable to all. The formation of a number of new insurance players in the country has proved to be significant in a number of ways; these providers have invested heavily in our healthcare system and they ve also helped to sustain our economic growth. We ve also seen national healthcare practitioners enter the insurance market. As the insurance industry has grown, its only natural that competition delivers better services at lower prices. I personally believe that the insurance sector will enjoy unprecedented growth for the coming years, and will be a major employer in Saudi Arabia, noted Al Mubarak. From an Islamic perspective, medical insurance is based on the Sunna and means providing healthcare to the local community through cooperation and collaboration. In other words, the costs of one person s treatment should be shared by others to form the basis of a caring, compassionate medical system, explained Sobaie. Collective insurance policies cost less than individual insurance policies. This approach will reflect positively on our community spirit and boost our nation s prosperity and productivity, as well as extending equal insurance coverage to both nationals and expatriates. As for the economic repercussions of medical insurance, Dr. Sobaie said: Such systems can offer many job opportunities for Saudi nationals and help employers monitor working hours, sustain collaborative insurance businesses and help ensure that healthcare corporations efficiently run healthcare facilities, accumulate capitals, and lastly, upgrade the efficiency of the national economy. As of today, the insurance sector contributes 5% of the national GDP. Al Mubarak was then asked about how the insurance business can play a critical role in raising the level of healthcare services, and whether or not healthcare service levels have improved following the introduction of the insurance law. Al Mubarak << August

20 replied: The progress achieved by governments is measured by the quality of healthcare and educational services they provide to their people. With more economic growth, and high-level local services, those receiving such services will in turn play a much fuller role in the economy as well as enjoying a stronger sense of national pride. Dr. Al Sobaie added: The application of the collaborative medical insurance policy will help to maintain the quality of medical services, improve the professional standards adopted by healthcare facilities, which require substantial levels of funding to purchase the latest equipment, support research into disease prevention and treatment, and hire more qualified staff members. In addition, medical insurance will shoulder some of the state s burden in terms of health spending, extend medical services at competitive prices to the general population, inject growth into the national pharmaceutical industry, improve the country s health indicators, control diseases, epidemics, and contain the soaring prices of medical services. The Kingdom of Saudi Arabia allocates around 15% of its public budge for medical service. Al Mubarak explained: As a general principle, medical insurance imposes lower financial burdens on beneficiaries and ensures that medical treatment is accessible to the vast majority of people. The combination of accidents, population growth, and higher medication costs has affected the medical sector. Now, I think it is the right time to educate Dr. Al Sobaie: The application of the collaborative medical insurance policy will help to maintain the quality of medical services. people about the benefits and advantages of medical insurance: - The sustaining of the country s social equality and unity. - Insurance is the best solution for the rising prices of medical services; the more people adopt insurance, the cheaper medical costs will become. - Medical insurance is the best choice for providing the highest quality medical services at competitive prices. - Medical insurance ensures that healthcare resources are utilized more efficiently, which in turn means that spending in both the public and private medical sectors covers more of the population. Finally, Sobaie concluded by saying: The Kingdom is enjoying an unprecedented economic boom across every single industrial sector. This growth has impacted upon the number of expatriates, which we expect will soon reach seven million people. Each and every insurance resolution passed in the Kingdom has aimed at delivering twofold, to further our economy and to ensure the health of our citizens and expatriates. We are moving in the right direction, and it s only natural that once we tackled basic development issues such as illiteracy that we d look at improving our healthcare services to become the most advanced in the world. Our health is our most important gift, and as a spelt out by the International Charter of Human Rights it is the right of all to have access to good, capable medical care. The Kingdom s government should be applauded for the route they are taking. < 20 THE COOPERATIVE HEALTH INSURANCE

21 For your information Information Articles of the Cooperative Health Insurance Regulations The Cooperative Insurance Regulations contain 19 articles jointly forming the acknowledged formula to upgrade the health services in the Kingdom. This edition of the magazine contains part of such articles and the remaining articles shall be published in the following issue. The Regulations were issued under no. 71 dated 27/04/1420 H, corresponding to Aug. 11, Article (1) These Regulations aim at providing and organizing health care fro all non-saudis residents of the Kingdom. It may be applied to Saudi citizens by a decision from the Council of Ministers. Article (2) The cooperative health insurance coverage shall include all residents and their families in accordance with the provisions of Article (5), paragraph (b). Article (3) Notwithstanding the phases of application indicated in Article (5), paragraph (b) and the contents of Articles (12) and (13) of these Regulations, every sponsor of a non-saudi resident undertakes to include such resident in the Cooperative Health Insurance. Residence Permit (Iqama) shall be granted or renewed only after obtaining the Cooperative Health Insurance Policy which covers the whole length of the Iqama. Article (4) The Health Insurance Council is formed and presided by the Minister of Health and membership of: A representative, at the level of a Deputy Minister, of the Ministry of Interior, the Ministry of Health, the Ministry of Labor and Social Affairs, the Ministry of Finance and National Economy, and the Ministry of Commerce. Each shall be nominated by their respective areas of work. A representative of the Council of Saudi Chambers of Commerce and Industry to be nominated by the Ministry of Commerce, and a representative of the Cooperative Insurance Companies to be nominated by the Minister of Finance and National Economy in consultation with the Minister of Commerce. A representative of the private health sector and two representatives of the government health sectors to be nominated by the Minister of Health in coordination with their respective areas of work. The Council members are appointed, and their membership renewed by a decision of the Council of Ministers for a renewable period of three (3) years. Article (5) Health Insurance Council supervises application of these Regulations. However, it shall perform the following tasks: Preparation of Executive By-Laws Draft for the present Regulations. Issuance of decisions necessary to organize changing issues with relation to the application of the provisions of the present Regulations, including specifying the application phases, the members of the beneficiary's family to be covered by insurance, the mechanism and percentage of contribution of the beneficiary and employer to the insurance cost, and establishing the maximum cost on the basis of an articulated study of the insurance cost. Pre-qualifying of cooperative insurance companies to operate in the field of cooperative health insurance. Approving health facilities to provide cooperative health insurance services. Establish the fees for pre-qualifying of cooperative insurance companies to operate in this field and the fees for approving health facilities to provide cooperative health insurance services after obtaining advice of the Ministry of Finance and National Economy. Issuance of the financial by-laws for revenues and expenses of the Cooperative Health Insurance Council, including salaries and rewards of its staff, after obtaining advice of the Ministry of Finance and National Economy. Issuance of the internal by-laws organizing activities of the Council Appointing of the Council's Secretary General on the basis of nomination of the Minister of Health; forming a General Secretariat and designating its tasks. Article (6) Expenses of the Health Insurance Council, including staff salaries and remunerations are covered from the revenues collected Article (5) per paragraph (e) on these Regulations as may be agreed the Ministry of Health and the Ministry of Finance and National Economy. Article (7) The Cooperative Health Insurance shall be applied through pre-qualified Saudi cooperative insurance companies operating in the same manner of the National Company for Cooperative Insurance (NCCI) and in accordance with the contents of the decision of the Supreme Scholars Panel no. (51) dated 04/04/1397 H. Article (8) The employer may expand the scope of services of the cooperative health insurance stipulated in the previous Article by additional addenda including diagnostic and remedial services against an additional cost. Article (9) Health preventive procedures applicable to the insured, including examination and immunization during the period that precedes the issuance of the cooperative health insurance policy may be arranged by a decision of the Minister of Health.< August

22 Building awareness in the Kingdom s latest industry 22 THE COOPERATIVE HEALTH INSURANCE

23 The Edition s Case Cooperative insurance has become one of the most talked about topics in Saudi society, particularly after the application of the Obligatory Insurance Law on both nationals and expatriates operating in the private sector. Many joint ventures in the insurance sector have been licensed of late, and they have begun to offer various cooperative medical insurance Schemes to the public. However, public awareness towards insurance is still limited, as many people still hold the belief that cooperative insurance programmes are driven by profits rather than the basic needs of the overwhelming majority of local people. This is far from the truth, namely that cooperative insurance is essential to developing the local community and boosting the standards of medical services. One of the main reasons for such false perceptions is from misuse of the insurance system. Furthermore, this belief has been compounded in the public s eye through the actions of a number of insurance providers whose aim is to generate quick profits rather than ensure high levels of service. Red tape and bureaucracy in the insurance sector have also aggravated these feelings, including the demand for excessive testing and treatments to increase both bills and profits! To underline these issues, The Cooperative Insurance Magazine interviewed a number of experts operating in the insurance business. Speaking on the importance of medical services, Mr. Ayman Al-Hout, General Manager of MedGulf said: Following the application of medical insurance programmes in 2006, awareness about insurance spread despite the fact that many companies who never provided medical coverage were initially skeptical towards the provision of insurance services. Insurance premiums were seen to be an additional cost. Now, the whole principle has changed as companies begin to reap the advantages of insurance coverage. Dr. Mohammed Al-Hizan, a Member of the Ayman Al-Hout The spread of insurance awareness in Saudi society is a must as the next step of obligatory medical insurance programmes will cover small to medium businesses Teaching Staff of Imam University explained: The insurance business is completely new to our people, many of whom may see it as an additional family charge. However, the truth is that insurance is contrary to this. I expect for that this misconception will be dispelled once people realize the advantages of the insurance system. Mr. Sameer Faddoul, General Manager of the Arabian Cooperative Insurance (ARABIA) said: Despite the fact that the Saudi insurance market grew from SAR 5.2 billion to SAR 9.6 billion from 2005 to 2006, much of this increment came as a direct result of the enforcement of obligatory insurance laws, such as medical and vehicle insurance. These two types of insurance do not reflect a rise in the awareness about insurance in general, especially when you consider that other types of insurance have not grown in step with medical and vehicle coverage, nor have they grown in tandem with the nation s GDP, population growth, and urban expansion. Mr. Mowaffaq Rida, Manager of the Gulf Cooperative Insurance Union (GULFUNION) noted that: Awareness about insurance is simply not adequate. He focused on the role of media to educate people about the importance of insurance and the protection it provides to local people and as a means to force competition amongst insurance service providers. Now, the question is what is needed to spread awareness about insurance? Dr. Al-Hizan replied: The lack of information about the advantages of insurance requires us all to offer what is in effect insurance education to the public. Collective efforts should be made to meet this goal via publicity and organizational campaigns through hospitals, public outpatient clinics and other state and private facilities. Al- Hout added: The spread of insurance awareness in Saudi society is a must as the next step of obligatory medical insurance programmes will cover small to medium businesses followed by Saudi families and individuals. The importance of insurance stems from its vitality. Faddoul believes that: Broadening education << August

24 and awareness about insurance is what we need to lessen opposition to the concept and make people understand that they need adequate insurance coverage. When an individual has a health problem they need to understand about cooperative insurance. This should be the first lesson of any awareness campaign address to the public, as insurance is a risk management tool. The absence of awareness about insurance causes mistrust and suspicion between the insured and their insurance companies. But why is awareness important to the insurance companies and communities? Insurance awareness in the public arena helps overcome risks whether covered by the medical insurance or any other type of insurance. Insurance helps protect people, communities, and national resources. Individual insurance premiums as measured against the national GDP are indicators of a civilized nation. Insurance awareness in communities is not confined to individuals but extends to government bodies as well. High insurance awareness means high demand on insurance products, greater job opportunities in the insurance sector and other associated businesses, noted Faddoul. Muwaffaq Rida adds: The availability of medical services at acceptable prices increases productivity and satisfaction, and can provide immense job opportunities for thousands of doctors, insurance employees, health workers and others. This will in turn lead to better investment in new clinics, hospitals, and better qualified tertiary care facilities. What are the problems, however, faced by the insurance companies due to a lack of awareness about insurance? MedGulf s Ayman Al-Hout replies: The chief problems lie in explaining coverage limits, exceptions, and terms of insurance policies for the insured and medical service providers! There are three parties operating in the insurance business; the insured, the insurance company and medical service provider. If there is insufficient insurance awareness, insurance companies and other Faddoul: The absence of insurance awareness and inferior education about the obligations, rights and benefits offered parties will face many problems. The harm that befalls one party will affect the rest as well! Rida notes that: The misuse of insurance cards can cause harm to others, as costs rise which causes the quality of service to drop considerably. So is the perception of medical insurance negative? What is the role of other authorities in correcting this image? Mr. Al-Hout surmises: Whilst the picture today may be positive, the industry has had to solve problems ever since the introduction of insurance in the Kingdom. However, as the industry matures these problems will disappear. Cooperation amongst all parties involved in the insurance business will benefit the performance of insurance companies. Al-Hizan believes that: Some healthcare providers have created misconceptions about our role as they complicate procedures unintentionally. The only justification for this is a lack of clear vision about accurate insurance coverage especially those connected to old age health problems, chronic diseases, skin problems. These problems can create a negative response towards the insurance sector as a whole. Rida accuses some clinics and hospitals of exploiting insurance companies: Some insurance companies try to elude their responsibilities. He also attaches much of the blame on the lack of strict control on employees to ensure no insurance benefits abuse. Faddoul attributes this to: The absence of insurance awareness and inferior education about the obligations, rights and benefits offered. Insurance companies can play a pivotal role in dismissing such stereotype by furthering awareness, customer education, offering a wider selection of insurance schemes, and pushing healthcare providers to act more responsibly by providing better quality medical service to the insured, fighting insurance abuse, and lastly controlling costs. We addressed the panelists on whether or not the authorities that should take responsibility for educating people about the advantages of 24 THE COOPERATIVE HEALTH INSURANCE

25 The Edition s Case cooperative insurance. Al-Hout replied: The responsibility should be shared amongst all authorities; the clients, insurance companies and supervisory authorities that are tasked with ensuring the application of insurance practices and regulations. Mr. Faddoul focused on, the shared responsibility amongst insurance companies, regulatory authorities, insurance consultants, risk management departments, ministries, respective official bodies, and others. However, the main burden has to lie on insurance corporations as they are required to provide trained marketing professionals who will address the public through mass media, support centers, the internet, and social activities of insurance companies towards the welfare of the community. The role of supervisory bodies like the Cooperative Medical Insurance Council (CMIC) and the Saudi Arabian Monetary Agency (SAMA) ought not to be neglected, explains the Gulf Dr. mohammed Al-Hizan The lack of information about the advantages of insurance requires us all to offer what is in effect insurance education to the public Cooperative Insurance Union s Rida. State bodies are trustworthy and credible. A host of regulations and codes have to be adopted and publicized for insurance corporations to ensure high quality service. Responsibility has to be shared as do the benefits. There can be no losers in our industry. Speaking about the role of mass media in communicating to the public, Dr. Al-Hizan says: Media bodies have critical roles to play by coordinating with bodies active in the insurance sector to spread insurance awareness via publications, family programmes, TV campaigns and other modes of communication. Mr. Rida adds his opinion, namely that: Such a large scale campaign will require some time to take root in peoples mind. Mr. Faddoul spelt out the different strategies employed to spread insurance awareness including: A. Call Centers. B. Mass Media. C. Public Relations and SMS Messages. D. The Internet. E. Tailored Sales Channels aimed at the General Public. F. Seminars & Specialized Educational Channels. The selection of type of mass media depends on those targeted. Symmetry between the type of the message conveyed and the proper form of media required is badly needed if we are to get the message across to the public. If a single component of the message is missing, the effects will be negligible, Dr. Al-Hizan said. Mr. Rida concluded by saying: There is a consensus between insurance companies and healthcare providers about extending medical services to low-income earners. Similarly, there needs to be close contact between hospital top level management and doctors to offer the necessary medical service at the necessary level. Finally, there should be agreements enforced between employers and their employees about not exploiting insurance companies by falsifying excuses to manage unjustified sick leave. < August

26 Corporate Social Responsibility (CSR), A Win-Win for the Kingdom! Prepared by: Hani Nadeem Inspired by social and charitable ideas and beliefs, the field of health care and health insurance has become a focus for companies looking to give back to society. It a result of social development, medical insurance has been adopted wholesale by multinational corporations looking to develop effective corporate social responsibility strategies. Cooperative Medical Insurance magazine interviewed Mr. Saleh Naser Al-Omair, CEO of Saudi Solidarity Co. and Mr. Serri Tuffaha from Al-Rajhi Insurance Co. to learn about Corporate Social Responsibility and the obligation of companies in the insurance sector to the community. Al-Omair began by saying: The prevalence of Corporate Social Responsibility was borne from the massive role the private sector plays in national economies. Corporate Social Responsibility holds many, diverse definitions; some take it as voluntary individual initiatives launched by corporations through extending services to the communities they operate in. Others view it as an obligation towards the community. Either way, the International Council for Development (ICD) defined Corporate Social Responsibility as a sustained commitment on the part of companies to ethically contribute to economic development and the welfare of their employees and communities. I believe there is an ethical responsibility on joint stock corporations to serve their local communities and take up this role. Here in the Kingdom, the government extends up to 50% of capital for the newly established joint ventures operating in industry, healthcare, and education in the form of interest free loans. What is the role of the private sector? Is it high time for it to take some of the Corporate Social Responsibility sustained by the government? Al-Omair said. Serri Tuffaha from Al-Rajhi Insurance Co. added: Corporate Social Responsibility has become part and parcel of the strategies of major corporations, as well as an indicator of their success and growth in local and global markets. The responsibility for developing communities is no longer in the hands of the public sector alone. Industry has to bear some 26 THE COOPERATIVE HEALTH INSURANCE

27 Social Responsibility responsibility for public development. Public standing and public opinion is pivotal to businesses today, and is a proof of their success. Once companies begin to play an active, responsible role in society and once they begin to grow their CSR investments firms will see significant returns in terms of public perception and branding. Medical Insurance magazine asked both guests about the employment and training of local human resources as part of Corporate Social Responsibility. Al-Omair said: First, we should explain that the government s previous five-year Development Plans largely focused on the gap between graduates and the needs of the private sector to find jobs for these Saudi nationals in the workforce. The success of Saudization policies comes from training local graduates and restricting the private sector from employing non- Saudi human resources. One suggestion may be to increase competition in the labour pool by removing restrictions on employees. Local manpower will become more competitive, and cost differences between local and expatriate employees will lessen. Solidarity Co. fully attends to Corporate Social Responsibility through numerous social activities in Bahrain to serve the local community there. Tuffaha said: Like other sectors, insurance companies invest significantly in Corporate Social Responsibility. As the insurance industry largely relies on experienced manpower rather than academic qualifications, there is a critical need to train national human resources, and for fresh graduates in particular to occupy positions held by foreign employees. At Al-Rajhi Insurance Co., we take part in training and coaching countless of fresh Saudi graduates and launching social and humanitarian projects like sponsoring orphans, and providing donations to local charities. AL OMAIR: The prevalence of Corporate Social Responsibility was borne from the massive role the private sector plays in national economies As in other industries, employees operating for insurance companies require insurance coverage. Do companies insure their employees? What are the insurance companies you deal with? What type of insurance cards are they offered? Are they subject to the Insurance Exceptions List? Mr. Al-Omair replied: We offer medical insurance to all our employees and their dependants. Actually, we approached a medical insurance provider to get our staff fully insured regardless of grade or position or type of insurance card. They all are equal. The company s policy considers medical insurance essential, and central to employment contract benefits. Mr. Tuffaha affirmed that: Al-Rajhi Insurance Co. offers blanket insurance policies for its employees and their dependants without any extra charge to them as soon as they being work with us. However, do companies really practice Corporate Social Responsibility or do they promise and then not deliver? Al-Omair, CEO of Saudi Solidarity Co. noted: I think most joint stock companies handle CSR as part of their social responsibilities. These companies should practice Corporate Social Responsibility as part of their commitment towards the community and not out of charity or as part of any slick promotional campaigns. In the future we will see a more develop approach towards Corporate Social Responsibility, with companies dedicating a certain percentage of profits towards this purpose. The same question was put to Mr. Tuffaha, who added: I don t think that Corporate Social Responsibility is simply about public relations. Al-Rajhi Insurance Co. has offered medical coverage to its employees for more than 15 years, preceding the enforcement of the Compulsory Insurance Law on expatriates. We believe that corporate success means companies should pay more attention to public and social considerations. However, how do companies vary in adopting CSR? Mr. Al-Omair said: I think the reasons why companies vary in their approach and adoption of Corporate Social Responsibility is largely caused by differing concepts and views in the Kingdom. Some see it as a charity others view it as seasonal voluntary humanitarian work. Still, our value system is based on religious and socio-humanitarian beliefs that form the basis of our social responsibility towards the local community. Many Saudi companies play a praiseworthy role in extending services to society. I firmly believe that the public sector should help the private sector play a more active role and build awareness about the concept of Corporate Social Responsibility as a whole. Tuffaha concluded that: Not a single company will be reluctant to help the local community, and it is high time that they know that that their success relies on developing the local community and creating a positive image. However, the ability of companies to deliver varies and depends on their financial resources. < August

28 Capital and Investment: Medical Insurance in the Kingdom A promising future and unparalleled growth Prepared By: Said Al Hasaniyyah Foreign insurance investors are flocking into Saudi as the market enjoys an insurance boom thanks to the sizable funds being pumped into this most essential of business sectors. Investment in the insurance sector is only set to grow once the Saudi Ministry of Health applies the Compulsory Insurance Law to Saudi citizens. Over 3.6 million expatriates currently working in Saudi Arabia have all been included in the compulsory insurance, which has been applied to enterprises with 100 employees or more. Now, that process is being extended to include medical insurance coverage on all expatriates, including maids which number over 1.2 million. These facts have driven investment in the insurance industry to unprecedented levels, including the founding of many insurance firms. However, there are many questions that need to be answered such as have new regulations led to the launch of new insurance investment businesses? How should the insurance industry reinvest and recapitalize their revenues? And how far should their revenues contribute to the development of the Kingdom s economy? 28 THE COOPERATIVE HEALTH INSURANCE

29 Finance and Investment Insurance Companies: Raising the Standard of the Saudi Insurance Market There is a common consensus amongst insurance specialists when assessing the effects of the new Insurance Law as devised by the Saudi Arabian Monetary Agency (SAMA) and the Cooperative Medical Insurance Council. The new law has led to the introduction of dozens of corporations to the market after a long period where the National Company for Cooperative Insurance (NCCI) dominated the insurance business in the Kingdom. Dr. Abdul Rahman Al-Humaidi, Deputy Governor of SAMA for Technical Affairs, commented: The commencement of the insurance business in the Kingdom was modest and lacked organization in the 1960s and 1970s. However, this has changed there were some 98 insurance brokers in In 1986, a license was issued to the NCCI as the first national company in this field. Replying to a question about what effect licensing new insurance corporations in Saudi Arabia has had on the economy, Dr. Al- Humaidi said: The insurance sector has and will continue to play a significant role in the socio-economic development of the country through providing insurance against risks faced by individuals and corporate entities, and providing indemnifications and remedies that help people run their business in a more risk free manner. Mohammed Al-Hussain, Assistant Secretary- General for Financial and Administrative Affairs at the Cooperative Medical Insurance Council, emphasized the attraction of the Saudi market thanks to the country s strong growth rates. He added that the insurance sector has a role in absorbing excess liquidity. According to Al- Hussain, the entry of new insurance companies will lead to additional investment and reinforce the Kingdom s economic infrastructure in accordance with the new laws and regulations which define the insurance sector s rights and obligations. In fact, said Al-Hussain, the new insurance corporations have become a major player in the market, and have provided the sector with a Dr. Al-Humaidi The commencement of the insurance business in the Kingdom was modest and lacking organization in the 60s and 70s of the past century, where insurance brokers offices rose to some 98 in solid basis for a real economic growth, as well as helping to spread awareness about the need for insurance amongst people. The enforcement of the Compulsory Insurance Law in the areas of medical, vehicle, and medical risk insurance will boost both profitability and efficiency. He considered that the introduction of this new industry has had a significant knock-on effect on tertiary investments and businesses such as claim processing offices, actuary specialists companies, reinsurance companies, as well as training and qualifying activities. Mr. Ali A. Al-Subaiheen, the CEO of NCCI, reiterated that: Insurance is a promising area for growth in the Kingdom. With a more organized insurance sector, the local market will mature more rapidly. The development of Saudi health insurance system shall provide additional business opportunities for both the insurance and the health sectors. Al-Subaiheen expected that the insurance law will be fully applied to expatriates during 2008, and the number of insured will rise from 3.6 million to 5 million by the end of the year. The value of the insurance market will increase from SR 2.2 billion to SR 5.6 billion by the end of Now, the question is how do insurance companies reinvest their revenues? Does the new law allow the insurance companies to reinvest their revenues and surpluses in activities outside of the insurance business? Al-Hussain said that the health insurance law has redefined the relationship between insurance companies and their partners such as the service providers, employers, and claims processing companies. The role of monitoring financial activities, be it relating to capital, financial solvency or investment issues, is filled by SAMA. He also pointed out that cooperation between SAMA and the Cooperative Medical Insurance Council (CMIC) is closely monitored and regulated to ensure that there is no conflict of roles. The Deputy Governor of SAMA for Technical Affairs believes that the issuance of the Insurance Companies Monitoring Law in 1424 H and its executive regulations << August

30 together with the enforcement of vehicle and health insurance has led to increased organization and growth. Furthermore, the assumption of a controlling role by SAMA and the CMIC in terms of supervising insurance companies activities has helped to establish the infrastructure of the insurance industry as a whole. Al-Humaidi confirmed that all the controlling authorities are anxious to apply the best international criteria to further organize the insurance industry and maintain momentum in developing the Kingdom s insurance market by creating a competitive insurance business that is capable of expanding both regionally and globally. Supervisory authorities, he said, focus on the development of human resources operating in the insurance business through massive education and training courses and help to sustain investment portfolios that can absorb more capital surpluses accrued in the insurance industry to protect the rights of the policyholders and ensure high measures of credibility and trust. Increased Scopes of Investment and Service Offerings Presently, the insurance business in the Kingdom offers schemes including but not limited to vehicle insurance, medical insurance, overland, marine and air transportation and construction insurance. Al-Subaiheen estimates that the volume of the insurance market is just under SAR 7 billion, with vehicle and medical insurance dominating the largest percentage. It is clear that the Saudi insurance market is destined for even better times after the enforcement of the compulsory insurance law and settlement of issues about insurance from an Islamic perspective. Presently, many insurance companies are staffed by legal and Islamic experts monitoring their internal policies and practices. This move could convince many people reluctant to take out insurance. The Saudi insurance sector is expected to rise above SAR 10 billion over the next five years. The organizational steps launched by the government have contributed to the stability in the Kingdom s insurance sector and a reduction in risk. These reforms have also proved to be a boon for investment by encouraging Saudi and foreign investors to enter into the insurance business. There are over 40 licensed applications with SAMA; 13 of which have been duly approved. The cabinet has authorized nine other companies. When asked about the possibility of present or future cooperation in terms of investment between companies and other financial institutions, Al-Humaidi pointed out that banks will remain key partners to insurance companies in the Kingdom. Both constitute the basic pillars of the national economy and financial system. Reaffirming Al-Humaidi s statement, Al-Hussain said: There is a good deal of cooperation amongst insurance companies and banks. A number of insurance companies have originated from banks or entered into partnership agreements with Saudi banks. Reinvesting Surpluses Noting how insurance companies reinvest their liquidity, Al-Hussain pointed out that SAMA is the authority supervising reinvestments. He added that: These reinvestments are well defined and organized within certain percentages and fields and in accordance with SAMA s regulations. Dr. Al-Humaidi said that insurance companies in the Kingdom reinvest their surpluses according to strict plans which should follow the country s regulations and as instructed by the board of directors of each company. SAMA usually examines all aspects of reinvestment programmes and assesses the risks as well as the positive effects of such reinvestment on the entire national economy, such as the creation of job opportunities, the maintaining of stockholder equity, and providing support to the country s financial stability. Responding to a question about the role of such revenues in the Kingdom, the Deputy Governor of SAMA for Technical Affairs said that the reorganization of the insurance sector has led to a 24 percent rise in insurance 30 THE COOPERATIVE HEALTH INSURANCE

31 Finance and Investment AL-HUSSAIN: There is real investment cooperation among insurance companies and banks. Some insurance companies have emanated from banks or entered with Saudi banks as partners. premiums worth some SAR 8.5 billion. Though the insurance premiums contribution to the Saudi GDP is still low (0.61% in 2007), I expect a phenomenal rise in this number over the next five years, said Al-Humaidi. He pointed out that indirect contributions of the insurance sector towards the nation s socioeconomic growth have considerably exceed direct contributions as the insurance premiums alleviate the risks involved in daily business and investment and sustain the quality of medical services. The CMIC Assistant Secretary-General for the Financial Affairs highlighted the massive revenues generated by the local insurance companies, as they bring about a positive impact on the country s economic growth rates. The majority of insurance revenues have been channeled into the Kingdom s economy as insurance companies list on the stock market. These companies are becoming highly attractive to investors as they provide attractive dividends and employ massive financial resources. It is unquestionable that insurance companies constitute a positive new addition to the Saudi market and have generated a great amount of business for other sectors of the economy, said Al-Humaidi. Although massive accomplishments have been achieved over the past few years, a host of challenges still faces the insurance sector in the Kingdom, including as scarcity of qualified human resources specialized in the insurance business and a lack of training on insurance best practices. There is an urgent need to get our local insurance personnel trained. SAMA has exerted tremendous efforts in regards to training local staff in the insurance industry through a schedule of programmes offered by the Institute of Banking in collaboration with Saudi universities who have created specialized insurance programmes. Many insurance companies are also taking some of the burden off SAMA by extending professional training to their staff and those interested in joining the insurance business, which is helping to solve the problem of a lack of specialized insurance employees. < August

32 Incidents and Treatments not Covered by Health Insurance! As the Kingdom s population becomes increasingly aware of insurance, questions have arisen surrounding what diseases are and are not covered by insurance schemes. To clarify what diseases and incidents insurance providers here in the Kingdom cover, and how healthcare is provided, we sat down with a number of experts and specialists to get the full picture. 32 THE COOPERATIVE HEALTH INSURANCE

33 The Editions s Axis Medical Coverage The relationship between insurance companies and healthcare providers is governed by law; healthcare providers treat patients based upon their insurance policies. Diseases excluded from the Unified Policy of the Cooperative Medical Insurance Council are the sole responsibility of the insurance companies, rather than healthcare providers. Speaking on the subject, Dr. Khalid Al Subaie, Executive General Manager of the Medical Specialized Center said: This policy is the outcome of significant research and dialogue between all the parties involved in the insurance industry: the private health sector, insurance companies and the business sector. The policy has been welcomed by the private health sector, on the proviso that it is periodically revised by a special committee. Dr. Musaed Mohammed Al-Salman, Member of the Cooperative Medical Insurance Council and Dean of the College of Medicine of King Saud University adds: An example of diseases or treatment excluded from insurance coverage would be plastic surgery or chronic diseases that pose no threat to a patient s life. The Unified Policy does cover short-term, life-changing treatments such as psychological disorders. In these cases, the policy allows for up to ten days of treatment. If treatment lasts longer, the insurance company is no longer required to cover costs; the employer has to decide whether it wants to continue paying for treatments which may incur significant costs. The Kingdom s new insurance regulations have yet to be fully applied in an insurance industry that is still maturing. The application of these policies is still patchy, and varies from company to company. Whilst certain companies extend insurance for exempted diseases against an additional payment, others strictly adhere to the provisions of the Unified Document and exclude exempted diseases from their insurance schemes. One firm is MedGulf Co., where Mr. Nabeel Abu Ramadan, Manager of Health & Life said: The exceptions maintained by MedGulf Co. are Dr. Khalid Al Subaie This policy is the outcome of significant research and dialogue between all the parties involved in the insurance industry: the private health sector. the same as those adopted by the Cooperative Medical Insurance Council. These exceptions have been carefully prepared on the basis of the common and applicable exceptions adopted by many global insurance companies. Exempted treatments and diseases include but are not limited to those connected to drug and alcoholic abuse, venereal diseases, industrial injuries, psychotherapy, infertility, and plastic surgery. Dr. Subaie said: The insurance companies used to draw up their own lists of diseases that they would not cover. Since the adoption of the Cooperative Medical Insurance Council s Unified Policy in 2006 the sector has drawn up and agreed to a standardized list of diseases which are exempted from coverage. Treating the Patient Speaking on the issue of how private hospitals apply these policies, Dr. Subaie said: The financial coverage for diseases is performed as per the insurance policy, so we may not decide which diseases are to be covered. Instead, the insurance companie takes full responsibility for this. Furthermore, we, in the Medical Specialized Center, put the patient s and national considerations first when providing healthcare, as many diseases exempted from medical insurance are treated free of charge or at a low charge either in our center or at other, more advanced care centers. We offer the same discounts as insurance providers in a bid to ease some of the burden off the patient, especially those from lowincome families who have to rely on charitable donations or financial assistance from non-profit organizations. Healthcare has to humane, rather than just a business for the Kingdom s citizens, added Dr. Subaie. Dr. Salman endorsed Dr. Subaie s viewpoint: as the human factor has to be the most important in healthcare. The Kingdom s Policy reflects this as it offers a 10-day coverage period for diseases exempted by many local and international insurance service providers. But how do healthcare providers and insurance companies treat diseases exempted << August

34 from the insurance coverage. MedGulf s Abu Ramadan explained: Diseases exempted from insurance coverage are well known to healthcare providers, and the patient is usually told prior to the administering of any treatment. Our role is to tell health providers about the confinements of our responsibility regarding these exempted diseases. However we, in MedGulf extent the best customer care by coordinating with patient service departments to provide patients with the same level of discounts as obtained by ourselves. In many cases, we coordinate with our customers top-level management and healthcare providers to discuss how we can share costs between ourselves. Dr. Al Salman noted that: the conventions and contracts made between healthcare providers and insurance entities are based on mutual interest. Insurance companies are always eager to provide full package service to clients and contract a wide variety of healthcare providers. However, the Cooperative Medical Insurance Council is unauthorized to interfere in this matter. Many diseases initially excluded from insurance coverage in the developing world have returned to the top of the list of the diseases that should be covered. Past and Present Insurance Practices Most of the diseases excluded from coverage in Saudi Arabia are taken from global insurance practices. However, the latest developments in the global insurance industry require that Saudi lawmakers review and reappraise the Unified Policy as issued by the Cooperative Medical Insurance Council. A revision was launched of insurance practices related to postnatal affections and congenital deformities that were previous ruled out by the Unified Policy. However, the new versions of the policy offer insurance coverage for newborns from the first week of birth. Similarly, global industry practices exclude hereditary conditions such as diabetics or hypertension from any insurance coverage as many customers sign up for coverage after diagnosis. Recent studies regarding these diseases may lead to some hereditary diseases being covered under new insurance regulations. Dr. Subaie offered an insight into how the global insurance industry takes a stand on new Dr. Abu Ramadan We in MedGulf extend support and assistance to our clients across the globe, and provide approvals and claims as quickly and as smoothly as possible to the beneficiaries operations, such as stomach stapling. Many diseases initially excluded from insurance coverage in the developing world have returned to the top of the list of the diseases that should be covered, like this operation which is not deemed as plastic surgery or some luxury operations like stomach tying. In the past, stomach-tightening operation used to be taken as a plastic surgery, performed at the patient s choice, and not covered by the insurance companies. Modern studies on diabetics and hypertension have shown that rapid surgical intervention is needed to treat obesity; this is why most advanced nations have reconsidered these operations in their insurance regulations. There are often heated debates about what is in the best interests of the patient and the insurance sector. These treatments are still not covered under our insurance laws in Saudi Arabia, Dr. Subaie added. 34 THE COOPERATIVE HEALTH INSURANCE

35 The Editions s Axis Insurance for the Elderly! One of the issues still under discussion is that of coverage for the elderly, and Dr. Subaie noted that: The Policy will soon be modified to bring about proper coverage for the aged in our society, even if this means funding by the government. Respect for the elderly is important to this society, and many of those aged above 65 do or have been hospitalized for long periods due to age-related health problems or accidents. Still, the question is who will decide to place an uncovered disease on the list of those covered by the insurance industry? There are special committees staffed by employees of the Cooperative Medical Insurance Council and the Ministry of Health earmarked to discuss this issue. What is positive is that the insurance industry here is engaging in dialogue and discussing the issue. The insurance industry globally is rapidly maturing, and we are not the only ones looking to reform this sector of our economy and society, added Dr. Subaie We should remember that the Saudi insurance industry is still in its infancy, and that by looking abroad for advice and expertise we will develop Dr. SALMAN The conventions and contracts made between healthcare providers and insurance entities are based on mutual interest. rapidly in terms of good governance and our professionalism. The development of the Saudi insurance sector has been exponential. In other words the number of persons insured has risen dramatically. We do need more companies to enter this market, to provide the necessary amount of coverage, he explained. Growing competition in the Insurance Market As the number of insurance firms grows and with the insurance market in flux competition amongst providers has become fierce. As the insurance business is driven by profit, firms are constantly searching for means and methods to gain an advantage. Dr. Abu Ramadan said: We in MedGulf extend support and assistance to our clients across the globe, and provide approvals and claims as quickly and as smoothly as possible to the beneficiaries. Our company s values are based on the round the clock support that we show to our clients through our Claims Support Center and our 24-Hours Patient Service Toll Free Facility. MedGulf s Direct Support Services are provided across the Kingdom and in the wider Middle East by both Saudi-based << August

36 agents sat in the country s healthcare centers as well as staff located in Bahrain, the UAE, Jordan, and Lebanon. When asked about how the Cooperative Medical Insurance Council monitors the market and holds the industry accountable Mr. Abu Ramadan said: The Council, headed by Dr. Abdullah Al Shareef, exercises its authority in a firm but fair manner to fully implement the Unified Policy to ensure that the industry as a whole provides the high quality insurance services to the Kingdom s residents. This is in line with the very objectives implied in the Cooperative Medical Insurance Law issued as per Royal Decree, the Ministerial Resolutions and other Royal Directives passed by His Majesty King Abdullah. However, my own belief is that increasing competition in the industry has resulted in poorer quality of service. However, Mr. Abu Ramadan does believe that competition may not be negative, but may also harbor benefits for the Kingdom. Competition can go one of two ways. Competition can be negative if companies unnecessarily lower prices, causing profits for the insurance sector as a whole to drop, which in turn may result in lower quality services and the rejection of medical cases due solely to costing. Competition can however be positive in the sense that it forces firms to be more productive, raise the quality of their services, and ensures that companies do not overinflate their prices. Dr. Salman reiterated that the supervisory role undertaken by the Cooperative Medical Insurance Council over insurance companies is to avoid any violation to the provisions of the Policy. The Council s supervisory body over companies operating in the insurance sector is staffed by both two representatives of the Cooperative Medical Insurance Council and the Saudi Arabian Monetary Agency (SAMA). They conduct frequent visits to insurance companies to investigate complaints against them. The 36 THE COOPERATIVE HEALTH INSURANCE

37 Council can suspend any insurance company not extending full insurance coverage or maintaining none of the codes adopted for the local insurance sector. As for employing doctors appointed by insurance companies for local hospitals, Dr. Subaie noted that: No doctors have been appointed by insurance companies to local hospitals. However, when a patient is given a medical report, he or she shall be informed by the insurance company once they have exceeded the limit set by their scheme. Diagnosis should be left to the doctor, and not the insurance company. Still, insurance companies can challenge a number of services provided to the patients if they are deemed to be unnecessary. In this case, the insurance company and the hospital will have to discuss what is best for both parties and reach a compromise. What Diseases or Conditions are excluded from Insurance Coverage? A full chapter was singled out in the Unified Policy of the Cooperative Medical Insurance Council for cases excluded from insurance coverage: 1. All diseases intentionally caused by person to himself/herself. 2. Diseases caused by drug abuse, stimuli, alcohol.etc. 3. Plastic surgical intervention unless required for the correction of conditions which are covered by the Policy. 4. Full laboratory tests, vaccines, drugs, preventive procedures requiring no surgical interventions provided by the Policy, except for protective measures as defined by the Ministry of Health such as vaccines, maternal and pedological issues. 5. Pregnancy or postnatal treatments for single women. 6. Treatment received by an insured person free of charge. 7. Recuperation and general physiotherapy programs offered by social care centers. 8. Any work-related conditions directly related to the insured. 9. Venereal and sexually transmitted diseases. 10. Fees accumulated after diagnosing HIV virus or any HIV-related affliction including AIDS or any other types of these diseases. 11. All cost resulting or connected to dental implants, dentures, fixed or artificial crowns and orthodontics except those resulting from forcible external media. 12. Vision or hearing correction procedures and any audio or visual aids unless prescribed by a licensed specialist. 13. Fees accrued from transporting the insured person in any vehicle other than a licensed ambulance vehicle or those managed by Saudi Red Crescent Society. 14. Hair loss, baldness, and hair transplants. 15. Psychotherapy, mental or neurological treatment sessions except for those deemed vital to the patient s health. 16. Allergy tests regardless of their nature except for those connected to misadministration of drugs, misdiagnosis, and malpractice. 17. All agents or procedures aimed at controlling, causing and preventing birth or infertility, or low productivity or pipeassisted birth or any other agent used for artificial insemination. 18. Any weakness or congenital deformity occurring before the validity of the Policy and which constitute no threat to human life. 19. Any additional costs or expenses sustained by the insured during hospitalization or admission except for expenses related to the insured s company, e.g. a child below 12 years accompanied by his or her mother as instructed by the treating doctor. 20. Acne or obesity treatment. 21. Organ transplant e.g. marrow or artificial limbs. 22. This Policy shall not cover the medical benefits or repatriation of a corpse or any claims resulting from or related to the following factors: A. Conflicts, invasions, hostilities (whether declared or not) and civil wars. B. Ionic radiations or radioactive contamination caused by nuclear fuel or wastes or combustion of nuclear fuel. C. Poisonous, radioactive or explosive material or any other dangerous byproducts or derivatives resulting from nuclear material. D. Injuries caused due to the insured s involvement in operations conducted by police corps or military forces. E. Any injuries caused by riots, strikes, terrorism, civil commotions.etc. There should be a policy that compels all insurance companies to extend proper insurance coverage to the elderly even if they receive support from a state fund. Supporting the elderly is at the heart of a civilized society. Dr. Khalid Al Subaie Competition amongst insurance companies impacts the quality of the services provided and can lead to unfair exclusion of some diseases from coverage. Nabeel Abu Ramadan The Cooperative Medical Insurance Council is eager to ensure that those insured pay a minimum for their healthcare. Whilst hereditary diseases have been excluded from the policy owing to their long-standing nature, they are covered at present by insurers. Dr. Musa ed Al Salman. < August

38 The Arab Shield Co. Medical Insurance Programmes Multiple Programmes and Multiple Benefits Healthcare is an essential right for mankind globally, as humanity seeks the best in healthcare to protect itself from the diseases which are becoming an everpresent in today s world. With news surrounding new endemics surfacing in today s press, it s no surprise that more than ever people are looking for the best healthcare they can find at a price that they can afford. In many countries today, state medical insurance, more commonly referred to as social insurance, is completely absent or is provided through minimal-cover insurance schemes. Containing soaring medical spending has become a challenge for governments as they look to balance improving healthcare with financials. 38 THE COOPERATIVE HEALTH INSURANCE

39 Programme How to meet the needs of a resilient and efficient healthcare system offering people high quality health services is one of these challenges. The Kingdom of Saudi Arabia should be praised for meeting this challenge, and providing comprehensive healthcare schemes for Saudi nationals, whilst ensuring that expatriate employers cover their staff with compulsory health insurance. This system of comprehensive medical insurance has been adopted through a number of phases, and will include Saudi nationals. The Saudi health insurance system has moved the burden of payment away from the individuals to the insurance provider. In this aspect the Kingdom s approach towards medical insurance is much more advanced than that of most other countries; insurance providers in the country will cover all health risks and resulting costs. Healthcare insurance programmes in the Kingdom extend to a wide range of healthcare services, rather than simply hospitalization costs, surgical interventions or outpatient clinics, to include paying for treatment sessions preceding the insurance s contract date, chronic diseases, pregnancy, ophthalmological and dental care. In other countries insurance providers may not class these cases as primary health issues, resulting in reduced or no payments to patients. A group of Saudi and European business men with experience in the insurance business joined together in 1997 to launch the Arab Shield Medical Insurance Company. Tasked with providing medical services to companies and individuals in Saudi Arabia, the company began operations in the Kingdom in Over the following decade, the company began to expand and grow its market share in the Gulf insurance industry. The Arab Shield Medical Insurance Company s focus, prior to offering any insurance service, is to ensure that all insurance contracts are in full compliance with the minimum requirement of the Unified Policy issued by the Cooperative Medical Insurance Council. To meet its goal of providing the best in service to its customers, the company recruited high profile and experienced staff from the insurance industry, including IT experts, healthcare specialists, economists, marketing teams, and top-rate physicians and pharmacists. The Company s basic values revolve around resiliency, customer focus, high quality services, and cost control. The company offers three types of insurance programs for corporate entities based on full adherence to the Cooperative Medical Insurance Council Requirements. Arab Shield launched its first package, titled Your Basic Health Programme. Its second package was Your Comprehensive Health Programme, and last but not least the third package, named Your Distinguished Health Programme. The three insurance programmes vary from what can be found in the market today from other insurance firms in terms of room capacity and daily services offered inside and outside approved medical facilities. The programmes also vary based on maximum fees and the types of consultation allowed per single visit as well as coverage limits for pregnancy, postnatal follow-ups, dental and eye treatment sessions. The most basic difference between programmes offered by Arab Shield and other insurance companies is the choice of approved health providers. Only the best hospitals and clinics are approved after rigorous testing by the Arab Shield Medical Insurance Company, which has contracts and relations with 250 Cooperative Medical Insurance Council approved and sanctioned medical facilities across the Kingdom. Some or all of the above types of insurance programmes may be combined into a single medical insurance contract depending on the individual s or corporation s requirements. These policies can be used according to the needs of the holder. Insurance coverage offered by the Arab Shield Medical Insurance Company includes: A. All fees accrued from medical check-ups, diagnosis, medications, and treatment. B. All fees arising from or connected to hospitalization, surgical interventions, one-day treatment session, and childbirth. C. Dental and gum treatment. D. Preventive medical procedures as proposed by the Ministry of Health such as vaccinations, maternal and child care. E. Expenses of repatriation of corpse of the deceased to his or her homeland. As per the laws of the Kingdom of Saudi Arabia, the company confines all cases not included in its insurance policies to the exceptions provided by the Unified Policy as issued by the Cooperative Health Insurance Council. << August

40 Benefits Coverage levels Excellent Comprehensive Basic Yearly maximum per person during insurance term SR300,000 SR250,000 SR250,000 Maximum allowable coverage for chronic and preinsurance diseases SR300,000 SR250,000 SR250,000 Hospitalization charges Room and daily accommodation within approved facilities Room and daily accommodation for companion of insured children below 12 years of age Charges of surgeons, anesthesia, consultants and practitioners Ordinary suite Special room Shared room Covered Covered Covered Covered Covered Covered X-ray and chemotherapy Covered Covered Covered One-day treatment Covered Covered Covered Outpatient treatment including: examinations, diagnosis, medications, etc. Covered Covered Covered Insured contribution to each outpatient clinic visit 20% with a max of SR100 20% with a max of SR100 20% with a max of SR100 Maternity expenses Covered Covered Covered Treatment of Immature delivery/ birth deformity for newly born infants Covered Covered Covered Circumcision an approved immunizations Covered Covered Covered Repatriation of a dead body to its home country, maximum SR 20,000 SR15,000 SR 10,000 Hearing aids, maximum per person per year SR 2,000 SR 1,700 SR 1,500 Dental care, including x-ray, extraction, filling, nerve treatment, gum irritation, and prescribed medications, maximum per year SR 3,000 SR 2,2500 SR 2,000 Sight correction, including examination once a year and two prescribed medical lenses, maximum per year SR 250 SR 250 SR THE COOPERATIVE HEALTH INSURANCE

41 Article Health Insurance A necessity for today s life Treatment of diseases is not a luxury item that that is coveted only by the rich. Everybody becomes sick, and the poor are much more susceptible to disease due to malnutrition, living conditions and ignorance. If a person can not afford insurance installments due to poverty, unemployment, or any other circumstance, they become vulnerable to various health ailments. They may even endanger the lives of their communities. This is the case with over 50 million American whose ages range between 18 and 24 years, who live without insurance coverage. To tackle the problem, the USA government has established a medical programme called Medicaid to offer assistance to the poor, unemployed, elderly and those low-income people who cannot afford medical insurance. The programme, however, is very limited and does not provide full coverage. Health insurance has been stratified based on class and income. While some classes receive the highest health services, others receive nothing. They remain vulnerable to health hazards. Statistics indicate that over 60% of the poor are not covered by any insurance, not even by the Medicaid programme. They do not meet the minimum requirements set by the scheme and cannot afford to spend money on buying private health insurance. Today, health insurance has become a major issue for delegates in the US elections. Democratic Party candidates Hillary Clinton and Senate Barak Obama leveled direct accusations at each other, with each accusing the other promoting erroneous information about their health initiatives. Obama suggested that Clinton s programme would force American citizens to spend on health insurance even if they could not afford to do so. Meanwhile, Clinton claimed that Obama s proposed health programme would exclude 15 million citizens. The Republican Candidate John McCain travelled to Florida to explain his proposed reforms to the health system, which included encouraging citizens to buy private health insurance, in turn driving competition within the health sector and reducing prices for insurance. Most of the programmes and promises made by US presidential candidates have focused on compelling employers to share their employees medical expenses with the government. However, this does not solve the problem; not all members of the community have jobs. Probably, such problems, in addition to others, have driven the UK to overlook the commercial health insurance and not to link a person s income with the ability to receive medical treatment. They adopted the concept of offering health insurance for all of its citizens with no exceptions as part of the government s responsibility to its nationals. However, in its Black Report on the UK s health system, the World Health Organization concluded that healthcare quality was not universal across Britain. The WHO report has acted as a warning to the British government, which has rushed to develop its healthcare services, considered presently as the best health system in the world. Presently, both the British citizens and UK-residents are fully covered for treatment whether they are working or not. < Prepared by: Dr. Col. Salih I. Al-Tasan PhD Hospital Management, Health Insurance [email protected] August

42 Al-Subaiheen: The Saudi Insurance Market is expected to grow to more than SR10 billion within the next five years. Speaking about the present status of the Saudi insurance market in general, and the progress that NCCI has made in particular, the Cooperative Health Insurance magazine sat down with NCCI CEO Ali A. Al-Subaiheen to discuss issues surrounding the industry. Work in the insurance industry can prove to be a real challenge. However, the business is exciting and offers the ability to promote leadership and management skills, especially in an industry which is relatively new to the country. The Saudi managed Saudi Company for Cooperative Insurance, or NCCI, is one such company, a real-life example of an insurance firm has overcome such challenges. As one of the pioneers in the insurance industry, the Saudi Company for Cooperative Insurance has succeeded in overcoming various trials and tribulations. Can you give us an overview of NCCI, its history, when was it founded, who founded it, and what are its goals? Prior to the company s founding in 1986, all insurance firms operating in the Kingdom of Saudi Arabia were licensed outside the Kingdom. Most of these firms practiced business in the Kingdom despite difficulties brought about by Sharia compliance. The NCCI was founded as a Saudi joint stock company having the necessary fundamentals to exercise insurance in accordance with Sharia law. We ve had to keep pace with the rapid economic growth in the Kingdom the insurance industry has had to work hard to keep up with the country s economic development. The company s formation and that of the industry in general was also supported by a decree issued by the Supreme Scholars Panel which approved the concept of cooperative insurance. How strong is the company financially, both in terms of capital and ownership? The NCCI was listed in 1987 with a paid up capital of SR 250 million. It was owned by three government bodies; The Public Investments Fund (PIF) with 50% ownership, the General Organization for Social Insurance (GOSI) with 42 THE COOPERATIVE HEALTH INSURANCE

43 The Edition s Guest 25% ownership, and the General Retirement Organization (GRO) with the remaining 25% ownership. In 2005, the founders decided to increase the paid up capital by SR 250 million, of which 70% was publicly listed for an IPO. The present ownership is as follows: 15% for both GOSI and the GRO and 70% as public shares on the Saudi Stock Market. What kinds of insurance services done the company offer? When the company was structured over 20 years ago, the insurance products it offered were directed mainly towards corporate customers who formed the majority of the company s clientele at that time, mainly due to a lack of awareness amongst the public. The power industry, real estate firms, and logistics and transportation were the main beneficiaries of insurance premiums. In mid-nineties, a decision was made to launch new products targeting individuals, including medical, automobile, personal accidents and home insurance. Now, these products have the mainstay of our company s business. What is your take in terms of human resources development and training in the insurance industry? Since its inception, the NCCI has focused it efforts towards attracting Saudi manpower and talent. It has invested large amounts of money in training, educating and qualifying its Saudi personnel, which is particularly important when considering that there s few Saudi graduates in the insurance sector. Institutes and colleges do not deliver relevant academic programmes or educational courses. We rely on ourselves to develop our own qualified manpower and people for the insurance business. However, training has to be ongoing. We adopt an advanced, comprehensive training plan aimed at recruiting and maintaining highly professional staff. We organize both on-shore and off-shire training programmes, symposiums and workshops focused on insurance and technical know-how. We run an average of 50 training programmes annually, which are supervised by the company s training center. The power industry, real estate firms, and logistics and transportation were the main beneficiaries of insurance premiums. Can you give an estimate as to the size of the insurance industry in the Kingdom; what is your share of this business, and how much market share do you expect to capture over the next five years? The present insurance market in the Kingdom is estimated to be worth SR 7 billion. Medical and car insurance contribute the largest sector in the insurance market. NCCI s market share is estimated to be worth 27%; we underwrote insurance worth SR 1,911 million in There s no question that the Saudi insurance market is booming, especially after the decision to make insurance compulsory and the announcement that insurance is Shariacompliant. This has helped to make insurance more acceptable to the population at large. Given these factors, we estimate that the Saudi insurance market will grow to over SR 10 billion over the next five years. How many employees do you have, and how may of those are Saudi nationals? We re constantly adding to our staff numbers here at NCCI to cope with our increasing workload and activities. NCCI works both through our in-house team as well as independent sales agents. Over the past few years we have succeeded in increasing the Saudization percentage to up to 72% of our total workforce. We re working towards increasing this number over the coming years. Do you expect that new insurance categories may be available soon? What will they cover? NCCI is often launching new, innovative products. Presently, the company is in the process of introducing schemes aimed at specific vocational segments, including one specifically for misdiagnosis in the health industry and another covering liability in the engineering and brokerage insurances. We expect that these types of insurance programmes will become common place soon. Does the company have any expansion plans outside the Kingdom? What are you aiming to do here? We believe that the Saudi insurance market is far more promising that anywhere else in the Gulf. << August

44 Presently, the Saudi market has only reached 25 percent of its potential. Therefore, at the present time, we are concentrating only on the local market. However, we have had previous experience with insurance premiums from international markets, but it was not practical to continue working in this area. From our experience the best business in most international markets is to be found inside those countries, rather than on the international market. We discontinued external, international insurance in On the other hand, NCCI has certain investments abroad, including in Bahrain, the US, Europe and the Far East. How do you envisage insurance in the Kingdom? What are your views on the new regulations, and how would you like to see the industry develop? The system is slowly changing from one which was all over the place, to one which is becoming much more organized thanks to the Saudi Arabian Monetary Agency (SAMA). Today, the insurance industry is governed by strong, well thought out legislation and regulations, which has helped to stabilize the market and allow for competition in the insurance market. We expect that these changes will play a significant role in developing the Saudi insurance sector and enable the industry as a whole to become more integral to the Saudi economy. Many insurance companies have been recently licensed and their shares are being traded at the Saudi Stock Market, a fact that has helped highlight the importance of this business to millions of Saudi investors. A number of articles relating to the new insurance regulations and by-laws have been a point of discussion for both the public and the industry; some have suggested that these articles should be either modified or replaced. However, whilst there are suggestions for modifying these regulations, there are more important issues that need to be tackled, such as the need to ensure strict regulation of the industry and impose fines on violating companies. I also feel that no new insurance licenses should be awarded until the regulations have been at the very least trialed for a short period of time. We believe that the Saudi insurance market is far more promising that anywhere else in the Gulf. The Kingdom s insurance sector has come up with a solution to developing Sharia-compliant solutions for both health and automobile coverage. What about other types of insurance? Cooperative insurance is an overall understanding of insurance, and contains concepts that are Shariacompliant as seen by Sharia Scholars. It governs how companies work in the Kingdom. To support this concept, certain insurance companies have formed Sharia Boards to ensure compatibility of the insurance products and investment policies with the Sharia requirements. For example, we at the NCCI have formed a Sharia Board for this purpose in The Board has approved seven insurance policies for sale in the Kingdom. Presently, the Board is in the process of revising other polices and the result shall be announced in the due time. What is the most recent insurance programme that you launched and how was it accepted in the market? Recently, we ve launched a number of insurance programmes. The most prominent of these are Sanad Plus and Shingen. The latter is a developed version of our Sanad scheme for vehicle liabilities insurance and is presently applied as a compulsory insurance. In response to customer requests for an automotive scheme that provides thirdparty protection and lower prices, we launched Sanad Plus. Sanad Plus provides up to SR 10,000 coverage for the insured vehicle in addition to third party liability of up to SR 10 million, and all for an annual premium of SR 775. The Shingen programme provides insurance coverage for vehicles traveling to the 15 EU countries included in the Shingen convention. 44 THE COOPERATIVE HEALTH INSURANCE

45 The Edition s Guest This programme meets requirements of these states, which need to be met for the granting of visit visas. It provides insurance coverage of up to SR 100,000 for personal injuries in addition to contingent medical expenses of up to SR 200,000. The programme is available for short term travelers at a premiums starting as low as SR 55. Yearly insurance coverage may also be provided at a price starting from SR 350 per adult per year. Licensing of new insurance companies has become a major issue for the insurance sector in the country. How has the competition affected you and, and how does your company react to such a challenge? Some people may think that previously we were alone in the market. That has not been the case. We ve been competing with insurance companies who have been operating in the country without full accreditation and licenses. We were the only licensed insurance company, and we have had to abide by the laws and regulations of the Kingdom, as well as being monitored by certain government supervisory bodies. The new insurance regulatory situation has created vigorous competition among insurance companies. However, we have no fears of such competition. The company has tremendous potential, it has long-term strategies and work plans that support the company s competitiveness. Our prices are likely to decrease, but we re not going to price the competition out of the market and likewise we are not going to spend less on the quality of our service. How does your company deal with the customer claims and insurance payouts? Customer satisfaction is essential to our success, and it can be a challenge to ensure that our customers are happy. We give priority to settling customers claims and inquiries. We ve established a complaint unit as a subordinate to the Customer Service Unit. An advanced IT system is employed so that complaints, regardless of their subject or monetary value, are referred directly to the concerned person. If no action or decision can be taken, then the complaint is elevated to senior management. Again, if no decision can be made then the CEO will become involved. Presently, the Saudi market has only reached 25 percent of its potential We settle of car insurance compensation claims after thorough checks with the Kingdom s Traffic Departments, and likewise we do the same for medical insurance with healthcare providers. How about yourself? When and why did you enter this sector, and what is your work background? First of all, I m holder of a BSc degree in Systems Engineering. I graduated from King Fahd University for Petrol and Minerals in After I graduated I worked for the Saudi Basic Industries Company (SABIC) and the Saudi Petrochemicals Company (SADAF) in the technical, IT and Financial Department for 17 years. Before I d left I d risen to GM, Finance and Information Services. In 1995 I embarked on the insurance business with NCCI as Assistant GM, Finance and Business Services. In 1999, I was appointed as Deputy CEO for Marketing and Sales, and was promoted to CEO in The Kingdom s new insurance rulings have given rise to increasing competition among insurance companies. However, we don t fear competition We expect that vocational insurance will become common practice in the near future Presently, the Saudi insurance market has only reached 25 percent of its potential. < August

46 Call Centers The first step to success! As competition heats up in the economy, companies are looking towards solutions and services that will give them a competitive edge. Call Centers have emerged to fulfill this need, and they have become one of the latest tools companies use to distinguish themselves and provide a higher quality of service to current and potential clients. Whilst call centers have flourished in large corporations like airlines and banks, call centers in many healthcare facilities are still inferior and confined to front desk employees. They require the buy-in of top level management if healthcare providers are to develop effective call centers able to communicate with customers and provide better service levels. 46 THE COOPERATIVE HEALTH INSURANCE

47 Technology Reviewing strategies proposed by marketing experts, call centers are seen as an excellent means of performance assessment inside medical facilities. Furthermore, they serve as a trusted link between the management, the medical facility as a whole and its customer base. Thus, call centers can assess and benchmark internal performance and act as a barometer for the industry. The modern life style of the 21st century requires better modes of contact to keep track with the relentless pace of people s lives. Mobile phones, the internet, and laptop computing have transformed traditional communication channels, which have become unfashionable and lost the interest of today s customers. The main challenges faced by call centers lie in leveraging off human capital, technology and strong leadership to provide customers with an unparalleled experience. Mark Quail, a guru on call centers says: Customers will find a way to communicate with you, be it via phone calls, the internet or video. Thus, we ought to offer them all these choices if we intend to maintain growth and capitalize on new business opportunities. People, Not Technology!! The call center creates the relationship between customers and employees of a company. This is why appointing, training, coaching, and retaining employees and hiring high profile managers pose substantial challenges for new call centers. The careful selection and development of employees, training, career opportunities, and sound management techniques are key to winning and retaining potential employees. What Should a Call Center Employee Do? First, they should familiarize themselves with the products and services offered by their company and introduce themselves in a professional and attractive manner. Furthermore, they should update their professional background on a regular basis and acquaint themselves with their company s customer database. As a call center employee is expected to perform all the previous tasks, they should be fully trained and coached. Above all, the key skills that call center managers should possess are the ability and aptitude to coach their subordinates regularly. Unfortunately, most call center managers receive inferior training in these skills. They lack coaching on how to sit down with their employees, review incoming phone calls, provide feedback, correct mistakes, and improve performance. Actually, performance levels maintained by call center managers are still seen to be inadequate, especially when reviewing customer feedback as may managers have been appointed from call centre staff, which means they find it difficult to review their peers performance! Another challenge faced by call center managers is that they may find themselves focusing on work-related stress suffered by subordinates and lack of familiarity with call centre technology. In general, Make sure you and your call centers are supported by the senior management in your corporation, recommends Merry Dubois, global bank call center manager. Call Centers and Front Desks! Call centers could be the answer for companies and service providers looking for good marketing and competitive edge. However, most health centers are not yet blessed with call centers. The question is: Do front desks perform all their duties, and do they fulfill the customers needs? The Cooperative Health Insurance Magazine interviewed Mr. Musa ed << August

48 Abdullah Al-Saleh, Administrative Manager and HR Director of the Medical Specialized Center to talk about how he has linked the internal operations of his health centers with the public. First, we addressed a question to Mr. Al-Saleh about the real definition, objectives, and duties of call center. A Call center is a telemarketing department which links service providers and customers. The service can be provided in the place of service itself or via service providers specialized in telemarketing. A call center service can take many forms such as free phone numbers, e.g. the 800 in KSA offered by local banks. As for health centers, the contact number can be used by a front desk. A call center can be publicized online or through reception area, adverts, publicity, SMS Messages, etc. A call center conveys information to customers about the quality of services and identifies customer needs in a professional way, said Al-Saleh. Our next question for Al-Saleh was about call centers and whether they affect the overall level of performance of a hospital. Of course, said Al-Saleh, A call center can improve the quality of service provided by a hospital, and boost or damage a hospital s reputation. A satisfied customer can attract 10 more customers to a successful facility running an efficient call center, and an unhappy customer can cause a facility to loose 10 customers. One of the reasons behind dubbing certain corporate entities as major companies is that they offer high quality call centers equipped with the latest telecommunication facilities and staffed with experienced personnel. One other thing is that call centers are the best way to attract potential customers from abroad and maintain current customers at home. In the information age, one accurate, simple, and direct conversation done through a call center can market and promote service better than any other mode of conventional publicity. What are the key requirements for selecting, hiring, and retaining call center personnel? Are there any conditions to assume a work at a call center? And last but not least, what department should supervise the activities of the call center? Call center staff are selected and hired depending on qualification, familiarity with the services provided by our hospital, communication abilities and linguistic skills, and their rapid response to customer enquiries, Al-Saleh explained. He pointed out that the selection and hiring of call center employees is conducted on the basis of the above skills, the same skills that are call centers the world over. Generally speaking, most call centers are supervised by marketing and customer care departments because effecting a full marketing plan largely depends on signing up both local and international customers via efficient call centers, Al-Saleh added. Finally, we reached the last point of discussion with Al-Saleh, focusing on the strategy of using call centers to cold call and communicate with customers and whether or not they should be subjected to any control or accountability. The most important goal of any call center is to positively promote the healthcare facility by educating customers about the terms, types, benefits and properties of the services provided, as well as the insurance coverage, level of customer responsiveness and the quality of advice given to customers, said Al- Saleh. Al-Saleh added that all incoming and outgoing phone calls are recorded and examined. Besides, Any failure or default should be corrected to ensure the highest quality of service. Intensive training sessions should be extended to call center employees. Strict rules ought to be adopted to attract the best call center professionals available in the local market, Al-Saleh added. < 48 THE COOPERATIVE HEALTH INSURANCE

49 COOPERATIVE HEALTH INSURANCE March2008, Issue 1 COOPERATIVE HEALTH INSURANCE August 2008, Issue 2 Capital and Investment Insurance... The Potential for Revenues and a Promising Future TOMORROW S WORLD Electronic network solutions Minimizing costs - saving time FROM ALL DIRECTIONS Between the cooperative an commercial insurance In All Directions COOPERATIVE HEALTH INSURANCE Creating contentment and building the economy The Public and Health Insurance What are the Benefits? Incidents and Treatments not Covered by Health Insurance! 15,000 copies Distributed to health insurance makers in the Kingdom A quarterly magazine issued in cooperation with The Cooperative Health Insurance Council Issue dates: For advertising: Tel: +966 (1) Fax: +966 (1) Riyadh, Kingdom of Saudi Arabia [email protected] January April July October

50 The world s most exclusive coupe, the Bentley Brooklands The classic choice for today s businessman The Bentley Brooklands is a design that marks a return to tradition for the car manufacturer to when the British brand first built luxury, muscular, two-door coupes six decades ago. Today, Brooklands marks Bentley s return to the luxury car market as a creator of the world s most exclusive coupes. 50 THE COOPERATIVE HEALTH INSURANCE

51 Life Style Brooklands is a name synonymous with the archetypal English car manufacturer. In the 1920s, the first British speedway and Bentley s racing home at Brooklands, near Weybridge, Surrey, would play host to the birth of both the British motor racing industry and the Bentley brand itself. This shared history and heritage was behind the decision to develop Bentley s new Brooklands coupe, or as the automaker s chairman Dr. Franz- Josef Paefgen put it: Bentley s proud sporting pedigree, forged by the exploits of the immortal Bentley Boys on the famous Brooklands racetrack in the 1920s, was the inspiration for our new coupé, capturing all the style, power and splendour of that era. In the finest Bentley tradition, the Brooklands sports coupe is replete with four doors, and is full of power and thrust, a mark of the Bentley brand which the company has long cherished. In fact, the Brooklands reaffirms Bentley s reputation as the foremost designer of the world s most exclusive four-door sports coupes. Bentley s latest classic embodies the beauty of the British grand touring tradition and the elegance of muscular performance. Brooklands enhanced chassis provides the handling to match the awesome power of the V8, 530 horsepower engine. That instantaneous acceleration is recognisable from the driver s seat as the renowned Bentley wave of torque and is due in part to the V8 engine s new twin turbochargers which operate with far greater efficiency at lower engine speeds, significantly reducing lag. The V8 engine is mated to a six-speed transmission with locking torque converter that provides an instantaneous response to the driver s demands. A semi-automatic function allows manual gear selection for even greater driver control and, when driven to its potential, means stronger and faster acceleration in every gear. While the new Brooklands is influenced by Bentley s fine coupe lineage, its design and engineering are thoroughly contemporary. The proportions of long bonnet, short front overhang and long rear overhang achieve the design objective perfectly, while the low roofline, steeply raked screens and pillarless side glass convey both power and movement. Brooklands sporting pedigree is unquestionable. Its low roofline with dramatically raked front and rear screens, pillar-less, elongated glass area and graceful, prominent haunches lend Brooklands a sleek, purposeful appearance. The Brooklands roof is 13mm (0.5 in) lower than the Azure and a full 47mm (1.9 in) lower than a four-door Arnage. The exclusive character of Brooklands is further distinguished by Le Mans front wing vents, a jewelled fuel filler cap, brushed aluminium Bentley Brooklands treadplates and a dark-tinted steel Bentley matrix grille with optional Flying B retractable radiator mascot. Brooklands rests on 20-inch alloy wheels. The 16-spoke two-piece Disc wheels are standard fitment with the 5-spoke, two-piece Sports wheels available as an option. Both designs, shod with Pirelli sports tyres, lend Brooklands an appearance of surefootedness, robustness and dynamism. A technological breakthrough for driving precision The very strong body also allows Brooklands to run with lower spring rates than the Arnage T, thereby achieving a level of ride comfort similar to that of the << August

52 Arnage R. The body-hugging, lower-slung Azure-derived front seats provide a more sporting driving position, enhancing the sporting appeal of Brooklands, compared with its Arnage and Azure stablemates. As an option, Brooklands may be specified with new carbon/silicon carbide, cross-drilled brake discs, further extending the new coupe s performance boundaries. Introduced on the limited edition Continental GT Diamond Series in 2006, the system features the largest diameter brake discs of any production passenger car on sale today. Measuring 420 x 40mm at the front and 356 x 28mm at the rear, with eight-piston callipers, the new brakes give an 8 kg reduction in rotating unsprung mass benefiting steering response, ride suppleness and acceleration. The coupe joins the Park Ward Continental S1 and the Continental R and T in Bentley s historic line of coupe offerings. Maximum Comfort and Space Its four-seat architecture and deeply bolstered seats lend the Brooklands interior a distinctly sporting atmosphere, complemented by design accents such as aluminium foot pedals and footrest. A new, single-piece, hide-trimmed roof lining flows uninterrupted from the front windscreen all the way to the rear of the car, mirroring the long, sleek profile of the elegant exterior. The interior designers sought to offer the very highest levels of comfort and legroom, in true Bentley grand touring tradition, while the pillarless window design enhances the feeling of space. The Brooklands cabin is wider both front and rear than the previous Bentley Continental R coupe the rear by ten percent and it easily exceeds the interior leg, knee, and headroom of any luxury coupe on sale today, offering a comfortable fit for its four occupants, In addition to this, the pillarless window design enhances the feeling of space. Individual rear seats with electrically operated sliding cushions, set further back than on the Azure, are separated by a new centre console, incorporating both storage and cup holders. As in every Bentley, peerless craftsmanship and bepoke finishing are to the fore. Every item of trim, be it veneer, hide or chromed bezel, uses authentic materials. All interior brightware, for example, is made from stainless steel and is as spectacular as any Bentley of yesteryear. Customers may also tailor their cars to their individual specification through Bentley s bespoke colourmatching service and selection of hide colours from previous model years. Each Bentley Brooklands coupé is handassembled, employing traditional coachbuilding techniques and the craftsmanship skills in wood veneer and leather hide for which Bentley is renowned. As the Brooklands was only ever intended for limited production volume, the design team was able to introduce features that call upon the unique coach-building techniques of Bentley s craftsmen and women. The Brooklands fast flowing roofline is a perfect example of those skills. To create the appearance of a floating rear screen demanded by the design team, the rear quarter panel and roof can only be joined by hand impossible in mainstream production. < 52 THE COOPERATIVE HEALTH INSURANCE

53

54 Jerba Island The mediterranean s tourist gem A combination of the past and present 54 THE COOPERATIVE HEALTH INSURANCE

55 Tourism and Travel The Greek hero of the Odyssey and his sailors lay on its crystal white sands enjoying the gorgeous moderate climate and warm sunrays. Thousands of years later, their grandsons settled on this island, where to this day they enjoy the island s fabulous sunset and rich history whilst listening to the calls of the muezzin ringing out from mosques, calls singing the praises of God for granting this gem to them. Jerba was dubbed by the French writer Andre Jeed as an Island where birds sing happily, and the place whose fresh breeze can save you from death. The Tunisian writer Muhammad Al- Marzouki claimed that a visitor to this land is faced with the magic beauty of nature. It is the island of dreams and golden sands, or the island of Olise as described by books of history and literature. It is Jerba, the island of Tunisia! A Balance between nature and civilization! No sooner than you step onto Jerba s soil do you feel that you ve entered a whirlwind of magical labyrinths. First, visit the palace of the Roman Emperor Polisses, who visited the Island 2000 years ago, and found difficulty trying to convince his soldiers and commanders to leave this island of beauty. Climb up the highest peak in the island for a view of its scenery and attractions stunning golf courses, picturesque hotels, and scenic ruins. Standing atop of Jerba s summit, one feels that the whole world is beneath your feet. Look down towards the eastern countryside of Jerba towards the Bou Gharrarah Sea to see the old village of Kellala with its white domes, surrounding green forests, and shimmering blue sea. Here, nature s green combines with the crystal shimmer of the sea. You ll sit under the shade of the branches of the olive tree listening to the breaking of the waves and the whistling of the shepherds as they lead their flocks in the nearby valley. You will follow the path to view the old Roman ruins scattered and forgotten amongst the rocks on the coast. Images of the past, of people tugging on a rope and bucket, will come to mind as you come across an old well dug into the ground, a hole described by a local as a deep water well of some ancient people. Your imagination will run riot when you reach a bridge linking Jerba Island with Gerges Village; the bridge was erected during the Roman Empire and seems to stretch for kilometers. For moments, you will stand still on the bridge to see Jerba from afar, shaped like a triumphant arch encompassed by the sea. A house located in the middle of the water will attract you and trigger your curiosity/ Locals will explain that it is an old abode built by someone centuries ago. When asking why << August

56 it was built in the middle of water, they will explain that the King s elder son died from a scorpion s sting, and another son born after the event died like the first. To keep them safe from a similar fate, the king decided to build this house in the middle of water for his successors. When the king was blessed with another son, he offered him a big bunch of grapes. Unfortunately for him, a scorpion was hiding inside the grapes, which then stung the boy who died like his two elder brothers! The road back from the bridge is surrounded by ancient bathing sites used by women for mud baths. Strolling amongst the trees you won t find a single soul in sight. This part of Jerba is deserted and serves as a resting stop for tourists exploring the island. You may even spot a piece of pottery lying in the dust. The village of Felalah is famous for its pottery, which tourists can watch being made. However, you may be left with more questions than answers when viewing the spectacle of pottery making. How can they make such intricate pieces of pottery, and how can they stack them so delicately without damaging the pieces? The beauty of Jerba is much more than its nature and scenery, and no where is this more evident than in Felalah! Another scene visitors to Jerba associate with the island is that of a kettle boiling over an open fire, as you are regaled by local stories. It is said that Felalah dates back thousands of years and is inhabited by tribes who still wear traditional dress. Villagers dress their guests in these very costumes for photographs, and place clay ampoules on tourists heads. Before leaving, you ll be offered a souvenir by locals expressing their gratitude and generosity. You ll depart Felalah full of memories of what you have seen and heard on this island of dreams. In fact, Jerba has been rated as the best tourist destination for 2008 according to the American Travel Guidebook, recommended as it is for its beauty, simplicity, and attractive landscape. With tourists valuing cleanliness and nature, Jerba has everything to offer. Encompassed by the Gulf of Gabes in the southeastern part of Tunisia, and with its 514 km2, Jerba is the largest island in North Africa. Its coast line, stretching over 125 km, offers some of the best beaches in the Mediterranean. Charming Scenery When wandering across the island, you spot many European tourists, mostly Germans, French, Italians, and Spanish, strolling around the Island. Jerba welcomes up to one million tourists a year. When asked why they ve chosen to come to this paradise, they reply: it is a great place with scenery so charming that we love to go swimming and then lie under the olive trees! We reached the Marina where private companies operate daily shuttle trips transporting tourists to Ra as Al Raml Island. Daily a fleet of four ships carry 150 tourists from Hawmet Al Souk to Ra as Al Raml Island, located about 15km from Jerba Island. The operators of these ships used to launch their trips in early morning, when groups of tourists would lend the crew a hand by casting their nets. Other groups would take a dive into the deep blue sea. Some of the ships are furnished with glass floors allowing those on board to see and snap away at the corals, fish shoals and dolphins below. Jerba s Gabes Gulf abounds with fish life and dolphin activity. Ships would then set sail to Ra as Al Ramel Island where tourists would enjoy an onboard lunch of grilled fish and that most famous of North African dishes, Couscous, together with salads and fruits served in banana leaves. After you step off the boat, why don t you take a close look at the civilizations 56 THE COOPERATIVE HEALTH INSURANCE

57 Tourism and Travel which have settled in Jerba. The first stop is in Kalala Museum, which is a great cultural center displaying all different types of folklore arts and handicrafts. This museum is one of Tunisia s largest, and houses over 4,000 square meters of artifacts and relics, as well as displays on the island s festivals, holidays, old traditions, handicrafts, myths, legends, and mosaics. The shows inside the museum offer a complete series of interactive exhibitions. In addition, the museum offers an oriental café, trade corner, and garden family sections called Fada at. As your trip reaches its end, it s time to go shopping! The taxicab will take you to Hawmet Al Souk, the Capital of Jerba to select the best traditional customs and items and chat with the locals. Here, you will discover Jerba s local delicacy Al Zameta. Made from fried and fineground barely mixed with olive oil and water, and sometimes with grapes or dates, or pomegranates or fresh or dried fig, Al Zameta is the dish of the island. Another Jerba dish is Dardoura, made from Al Zameta mixed with water and Couscous. This dish is usually served with vegetables, fish or salted meat. Another dish prepared by the people of Jerba is that of Al Mathlouth, barely mixed with dried fish soup. Jerba is a gastronomic delight, with dishes such as wazaf (cooked cauliflower), alhasou (cooked barely, wheat, or sugar cane mixed with olive oil, and haresa or hot spices. After finishing your meal, take a ride on a horse at the equestrian club, or chat with According to American Travel Guidebook, Tunisia s Jerba Island is the Best Tourist Destination for 2008 some of the island s younger residents to learn about how the challenges of living, family life and marriage on this most beautiful of locations. Finally, you ll leave depart the Island using Jerba s International Airport located 9 km away from Howmet Al Souk. The airport has been expanded from a capacity of 500,000 to accommodate more than 1.5 million people annually. The new terminal expansion is expected to be finalized by the end of this year, allowing the airport to receive up to 2.8 million travelers on charter trips and holiday packages. After visiting Jerba you ll be heading home with suitcases filled full of unforgettable memories and recollections of a truly unique place. According to American Travel Guidebook, Tunisia s Jerba Island is the Best Tourist Destination for < August

58 Saudi Insurance to constitute 2.5% of the national economy 40 Growth percentage Results from a recent economic survey into the Saudi insurance sector revealed that the sector will create between 35,000 to 40,000 job opportunities over the coming decade. The sector itself will be worth US$18 billion by 2016, and constitute % of GDP, compared to 0.5% in The study, conducted by Al Ektesadeyyah Magazine, noted that the insurance sector will grow by 30 to 35% during the next five years. Furthermore, the study revealed a number of pressing issues facing the local insurance sector, including funding, a lack of human resources, a lack of social acceptance and competition in the insurance sector, unfavorable legal frameworks, and low regard given to the industry by the relevant authorities. A new study expects the insurance sector to double by 2009, reaching US$ 15 billion. That number is set to rise to US$ 30 billion over the next decade. Several Saudi insurance experts have forecast that the Saudi insurance industry is worth US$ 7 billion annually. Growth in the Middle East s insurance industry is estimated to be 10% annually. < Years % 2.5% World Insurance premiums total US$ 3.7 trillion! 2.5% 40% 20% Insurance premiums annual growth rate world wide Takaful insurance premiums annual growth rate in the Middle East Takaful insurance premiums annual growth rate in the GCC Countries Insurance experts have speculated that the total volume of global insurance premiums rose to some US$ 3.7 Trillion in 2006, owing to acute climate changes, terrorism, globalization and other afflictions affecting the global economy. Total insurance transactions, including mergers, acquisitions, and new joint ventures was estimated to be worth to nearly US$ 23.6 Trillion. Moody s Credit Rating Agency notes that the Middle East region makes up only 0.2% of global insurance transactions, yet it provides an attractive market for international insurance companies based on solid infrastructure, non-insurance investments, and the remarkable rise of individuals share of GDP. Middle Eastern governments are also encouraging retirement saving funds as well as imposing obligatory insurance contributions above and beyond that of healthcare. Moodys expects this trend to grow exponentially over the next year. < Average spending on medical insurance rising A recent business study revealed that the average spending on medical insurance has risen dramatically in the Middle East. Whilst spending outside the GCC has yet to touch US$22, the average spend in the Gulf on medical insurance jumped from US$20 in 2000 to US$74 by the end of the last year. Prepared by the International Network of the Companies Operating in Tax and Accounting, the study noted that the volume of the Saudi insurance market is likely to rise to some SR 30 billion over the next decade compared to SR 7 billions for The study, circulated by Al Watan newspaper, estimated that the volume of Islamic cooperative insurance has reached US$3 billion. With multinational players looking to enter the Middle East insurance market, annual insurance growth is expected to hit 15% this year. Moreover, the international rise in insurance premiums has risen to some US$2,900 billion. In some industrialized nations, insurance investments amount to 10% of GDP compared to 1% in the Arab world. < 58 THE COOPERATIVE HEALTH INSURANCE

59 The international conference for Cooperative Insurance 2008 held in Dubai Cooperative Insurance Volume to rise to US$14 billions by 2015 Reports and Analysis Indicators and studies present at the International Conference for Cooperative Insurance 2008 Dubai point to significantly higher growth for the cooperative insurance market, estimated to be 20% compared to only 5% for the insurance sector as a whole. Estimates from the Bahraini Insurance Society point to figures upwards of US$.32 billion for the global cooperative insurance market; sales in the Middle East accounting for a significant percentage of global numbers. The annual rise in the cooperative insurance market ranges between 15% to 20%. Insurance specialists claim that there are around 60 joint ventures operating in the cooperative insurance sector in 23 countries globally; international cooperative insurance premiums amounts to US$2 billion, or 9% of the international insurance market. Latest estimates revealed that the cooperative insurance market should touch US$7.4 billion by 2015, according to Bahrain s Gulf News newspaper. The Ernest Young Report submitted to the Conference transpired that the rise in the cooperative insurance sector exceeded the conventional rise in other conventional insurance business in most Middle East countries, and the general cooperative insurance business covering various types of accidents and real estate constituted half of the aggregate cooperative insurance business regionally and internationally. The Report said that the most important motivators of the cooperative insurance solutions is the global growth rate, rise in national GDP, young population structure, wide spread awareness, and demand on Islamic compatible insurance products supported by Islamic-based financial solutions % 0 Takaful growth percentage Traditional growth percentage 20% Mr. Nour Abdullrahman, Manager of Insurance and Auditing Services in Ernst and Young said that, with international insurance premiums amounting to US$ 3.7 Trillion there is a real opportunity today for the cooperative insurance sector. Most insurance sectors in the Islamic world are still embryonic, and insurance premiums in the Middle East region make up only 1% of national GDP, compared to 8% in North America. Increasing liquidity and rising incomes in the Middle East region are contributing to the growing international cooperative insurance business. Mr. Sameer Al-Abdi, Head of the Islamic Financial Service Group at Ernst and Young explained that: though the challenges are significant, overall prospects for the cooperative insurance business are promising and should push the region to find answers towards providing cooperative insurance services that minimize risks. Cooperative insurance schemes will begin to supplant conventional insurance products; the main challenges for cooperative insurance companies lie not only in satisfying the global demand but also in furthering their internal competitive edge to provide attractive insurance solutions that are distinguished from what is already available in the market today. Estimates vary but most suggest that the cooperative insurance business will grow to be worth between US$10 and US$15 billion in the next decade. A number of issues need to be resolved by the insurance sector however, including weak financial environment, the limited cooperative reinsurance business, asset management strategies, limited local distribution channels and products. < August

60 Medical insurance and inflation Inflationary pressures in the Kingdom have had an impact on insurance services, with insurance premiums in the Kingdom rising by five to ten percent this year partly due to pressure from healthcare providers. Rising costs have not only been confined to insurance policies, but have also extended to medical contributions required by healthcare facilities, which have risen by 20 to 25 percent. Prices increases have come about despite fierce competition driven by medical insurance companies and health providers. Insurance companies have defended the price rises, which they say are based on rising costs for medical services. In an interview with aswaqnet.com, Mr. Izzat Jamjoum, Vice President of Gulf Union Insurance Co., said, Inflationary pressures on the economy have led to rises in the value of insurance premiums, rises of between 5% to 10% depending on the types of services covered. Mr. Jamjoum attributed the higher pricing of insurance premiums to the rising cost of medical services offered by healthcare providers who raised their prices by 15% during the past few months, causing insurance premiums to rise too. These rises are minimal compared to the rising cost of hospitalization, admission and other medical services. Mr. Khalid Al-Faqi, sales manager for the Cooperative Insurance Co., added, The application of the obligatory medical insurance law has led to a massive number of claims. Rising demand and a lack of suppliers will also lead to rising prices. Al-Faqi explained to the media that, Prices have risen by 10% and may rise again. This rise may temporary, but that very much depends on the number of people looking to take out insurance premiums. The more people take out premiums, the more prices will drop. < Study by Saudi Chamber of Commerce & Industry highlights issues affecting the insurance sector. A study recently published by the Research Center at the Saudi Chamber of Commerce and Industry in Riyadh has highlighted a number of problems currently affecting the local insurance industry, namely double standards adopted by state authorities, a lack of public acceptance of insurance practices, a lack of transparency and credibility, baseless claims lodged by customers, as well as the lack of time granted by SAMA for companies to comply with new regulations. The study focused on problems faced by insurance companies, including access to visas, inadequate training centers, the rejection of company documents by certain government authorities, a lack of understanding and value towards the broker s role, difficulties related to accidents investigated by local traffic departments, the absence of licenses, unclear insurance policies governing the insurance business, non-compliance on the part of Saudi insurance companies with the international conventions and practices, a weak legal environment, fears of loss on the part of the insurance companies, and misapplication of the obligatory medical insurance law. Finally, the study noted that the nature of local insurance climate, whose value has never exceeded SR 2.5 billion against supposed estimates of SR 10 billion has led analysts to conclude that wastage is endemic in a sector that falls far below its potential. < 60 THE COOPERATIVE HEALTH INSURANCE

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62 France s Medical Insurance Programmes: A Pivotal Foundation of the French Social Security System Globally, countries develop and tailor healthcare systems to suit their unique social, demographic, and economic conditions. Two of the most developed and advanced healthcare systems in the world are found in America and France. For decades, Western nations could through massive investment in facilities and human resources create national health services to provide unrivalled healthcare. Life expectancy rates rose to 80 years in France and 77 years in the USA. Infant mortality rates dropped to 5 per 1000 newborns in France and 8 per 1000 in the USA. The annual cost of spending per person, typically high in industrialized nations, is US$5300 in the US and US$2700 in France. Unlike in the US, which adopted an insurance system that only provides partial coverage to its citizens, the French healthcare system has been in place and has continued to evolve for more than one hundred years. It was classified the best health system in the world by the World Health Organization (WHO) in June 2000, by UNICEF and the Organization for Economic Development. It permits all French citizens access to treatment and to the latest discoveries in medical research. Statutory Health Insurance Coverage In France, health insurance is administered by three different schemes: 1. The General Social Security Scheme that covers all salaried employees in commerce and industry and their dependants (about 84% of the population in all). 2. The Agricultural Insurance Scheme that covers farmers and their dependants. This type of insurance covers around 8% of population. 3. The Social Security Scheme for the Self-Employed manages health 62 THE COOPERATIVE HEALTH INSURANCE

63 Around the World insurance coverage for non-agricultural self-employed professionals such as entrepreneurs, tradespeople and lawyers. This scheme extends to 6% of population. There are additional schemes that cater to certain types of employees, such as government bodies, local doctors, students, and those serving in the army. Other smaller schemes, also operating on a work-related basis, cater for certain specific categories of the population (miners, railway workers, seamen, etc.). In France, health insurance is a branch of the Social Security system operated by the Ministry of Social Affairs. It is funded by workers salaries (60 percent of the fund), by indirect taxes on alcohol and tobacco and by direct contribution paid by all revenue proportional to income, including retirement pensions and capital revenues. On the surface, it appears that health insurance reimburses medical care providers less in France than in other European countries. However, more than 80 percent of French people have supplemental insurance, often provided by their employers. The poorest have free universal healthcare, which is financed by taxes. Additionally, the treatment costs for those who suffer from long-term illnesses are completely reimbursed. The French medical insurance system differs from other national schemes due to means of payment. Under a direct payment system, patients are refunded upon claims to the insurance system. Around 11.3% of the medical claim cost is borne by the individual. Some French organizations offer supplementary medical insurance via co-operative firms which cover around 12.1% of the national healthcare cost and offer services to 87% The French Healthcare System and its Users The French government provides a number of diverse and comprehensive healthcare rights. For more than 96 percent of the population, medical care is either entirely free or is reimbursed 100 percent. The French also have the right to choose among healthcare providers, regardless of their income level. For example, they can consult a variety of doctors and specialists or choose a public, private, university or general hospital. Moreover, the waiting lists for surgeries found in other government supported healthcare systems do not exist in France. At the start of the decade, the French government passed a law allowing the healthcare system to provide additional assistance to families who need help with daily tasks. On March 4, 2002, the government passed another law, establishing compensation for all medical-related accidents whether fault is found or not. These new rights were added to other long established rights, such as compensation payments in the case of pregnancy or disease prevention, medical care for workers and students, family planning, and systematic screening of certain diseases. Organization of the Healthcare System Since 1996, the French government has presented a law to parliament every year in order to finance social security. This document delineates the budget for next year s national expenditures on health insurance. It additionally outlines goals to be achieved by the healthcare system during that year. However, these goals are broadly drawn as the actual healthcare budget varies according to revenue earned through taxes each year. The French government provides health insurance to three major groups of the population: salaried workers and their families, farmers, and artists and business professionals. Within each of these three groups, expenditures are divided by region and by type. Types of expenditures include general practitioners fees, specialists fees, medical prescriptions, public hospitals, private clinics, nursing professionals and sanitary transportation. The state exercises its trusteeship through central, regional and departmental services. There are two large organizations that work under the Ministry of Health: General Health Management and Hospital and Healthcare Management. Since the end of the 1960s, the number of doctors increased from 60,000 to more than 185,000 at the beginning of the 21st century. There are three doctors for every 1,000 habitants, which is an average ratio when compared to other Western countries (Great Britain 3:1800, USA 3:2700, Germany 3:3400 and Italy 3:5900). The number of women doctors in France is growing. More than 40 percent of practicing doctors are women and more than 50 percent of today s medical students are female. Hospitals and Clinics: The Medical care establishment is made up of three types of institutions: public hospitals, private clinics and not-for-profit healthcare. One thousand and thirty-two hospitals fall under the public hospital statute. Regional, university, local and general hospitals are included in this category. The Public Assistance Hospital of Paris is the most important and largest group of public hospitals. Created after the French Revolution, it became a hospital organization for the poor and for those involved in work related accidents in Today, this establishment is a complex organization that is of the population. << August

64 responsible for a high standard of care, medical technology and research. Since 1985, each public hospital has been financed primarily (91%) by endowment funding that is paid for by health insurance funds. Calculated by bases from previous years, these endowments are developed each year by a national rate manager. Private clinics have quite a different history from public hospitals. They were started by surgeons and obstetricians and eventually evolved into private hospitals. Another sector of the French healthcare system consists of not-for-profit private hospitals. These hospitals were originally denominational and currently make up a double digit percentage of the inpatient services among French Medical Care Institutions. The cooperation between the public and private sector in the French healthcare system is a positive feature that allows citizens to avoid waiting lists for surgeries, which are often associated with socialized medicine. Indeed, private medical care in France is particularly active in treating more than 50% of surgeries and more than 60% of cancer cases. This unique combination of government financed medical care and private medical services produces a health care system that is open to all and provides the latest in medical technology and treatment. France s Healthcare Services The French government allocated 11 percent of its GDP to its healthcare system, to cope with the increasing demands on medical service brought about by the stresses of modern life, morbid obesity, and stress. Furthermore, a quarter of the pharmaceutical industries revenues are reinvested back into the French healthcare system, mainly into marketing. A recent report issued by the Public Social Affairs Monitoring Authority (PSAMA) concluded that approximately 3 Billion per annum on healthcare campaigns. Changes have been suggested to these campaigns by PSAMA, which has recommended that the amount spent by pharmaceutical industries be slashed by 50 percent. Countries in the European Union, particularly France, have tended to provide medical insurance and healthcare coverage for all, irrespective of whether or not they are employed. Whilst funding methods vary slightly, general medical coverage has been traditionally paid for by national taxation. For several decades now, France has been one of the healthcare highest spenders in Europe following the emergence of state-run medical facilities in 1910 to cater to increasing demand for healthcare from the public. Free healthcare for all is one of the founding principles of the French Republican system, and was traditionally seen as a means to assert the state s authority irrespective of local, ethnic, or provincial leanings. The inclusive approach that the French takes towards healthcare is critical to the system, based as it is on linking social spending to taxation. The French healthcare model covers all, irrespective of their ability to pay; treatment for the unemployed is covered by taxation revenues from employed persons, as are persons who are retired. In effect, healthcare spending is based on the patient s need rather than their ability to pay. As for medical insurance, France s short spending came due to rising life expectancy, and the advancement and sophistication of medical services especially when treating diseases could not be treated before, as treatment techniques have become costly. France s level of spending has risen dramatically in part due to increased life expectancy and expenditure on newer, more advanced treatment techniques which have proved to be costly. As the numbers being treated by the system rise, so has the burden on the French State. Two years ago, the French government proposed a reform plan called Hospital 2007, based on offering financial incentives for updating purchasing and pricing procedures to reducing the wait in emergency rooms Additional reforms proposed by the French government are intended to persuade general practitioners to look at other methods of treatment other than hospitalization. Criticisms of the plan maintain that the reforms do not take into consideration the welfare of the patient, and may encourage doctors to prescribe drugs and treatment which are unnecessary.. Critics also allege that under the new reforms, short hospitalization periods for treating of certain diseases without referral to specialists works out to be more lucrative than longer hospitalization period supported by specialist treatment. Public Health Agencies. 1. National Health Institute. 2. The French Agency for the Safety of Medical Products. 3. The French Agency for the Safety of Food. 4. Health and Environmental Safety Agency. 5. The French Institute of Hematology. < 64 THE COOPERATIVE HEALTH INSURANCE

65 Legend Every issue of the Health Magazine will contain terminologies commonly used in the cooperative health insurance field for further familiarization to both insurance operators and beneficiaries. Service Provider Networks Health service providers as approved by the Cooperative Health Insurance Council and specified by the insurance company to provide service to the employer/ policyholder and to charge the insurance company directly upon presentation of a valid insurance card by the insured. Such networks shall include the following grades: First Grade: Primary health care. Second Grade: General hospitals. Third Grade: Specialized or referred hospitals. Validity The number of days during which the policy shall remain in force in case of non-payment of the total subscription as shown in the policy schedule. Insurance Term The period indicated in the policy table during which the insurance remains in force. Policyholder The legal or abstract entity in whose name the policy was issued. Basis for Remuneration The method used for compensating the policyholder for reimbursable expenses incurred and claimed by the insured after discount. Agent An employee offering and selling insurance policies as: An independent agent representing at least two insurance companies who serves customers by searching for the best coverage available against the lowest prices and collects a certain percentage including customer service charges from each insurance policy. Direct agent or appointed employee representing only one company who sells policies only of that one company and receives the same commission as that of the independent agent. Enjoyment period In health insurance, the enjoyment period is the number of days during which benefits are paid to the policyholder or a dependent. For example, the enjoyment period is computed as of the January the 1st and ends on December the 31st of each year. Case management The system of coordinating medical services to treat the patient, develop the services and reduce the cost. The Case Manager coordinates the provision of health services to the patients. Collective Insurance Policy Property insurance policies require that the policyholder must procure insurance equal to a certain percentage of the property value to be eligible to collect the total value of the policy in case of property loss. In health insurance policies this is applied in terms of a percentage of each claim exceeding the value the policyholder paid by 20% in a collective insurance policy. The policyholder pays the agreed amount in addition to 20% of the total covered losses. After payment of 80% of the losses limit, the insurance company has fulfilled its obligations. Coinciding Periods When a patient is admitted to a hospital for a variety of diseases or cases at the same time, all benefits must be provided as if the patient suffers one case only. Coverage Protection is provided by an insurance policy in property insurance, including coverage against insured risks, insured property, insured premises, and policy beneficiaries in addition to the coverage value. Insuring Area Any losses or damages to property that may lead to a financial loss. Insurance Policy Arranger An insurance company representative who tries to assess the losses of an insurance company when a claim is raised. Insurance companies appoint independent policy arrangers on a need basis. An arranger may operate for more than one company at one time and charge such companies on the basis of hourly rate in addition to the mileage he or she covers. A general arranger works in favor of the customer in collecting claims and collects his or her charges in terms of a percentage of each claim. Expense Limit A pre-set amount a person is required to pay before the insurance company pays 100% of that person s medical expenses. Reasonable and Recognized Medical Expenses Medical expenses that coincide with the charges of the majority of the approved physicians or hospitals in the Kingdom provided that such charges are for the treatment of identical cases and that the approved physicians or hospitals are of equivalent qualification and classification to those who have offered the treatment. Medical treatment that is no different to that considered as acceptable by the approved physician. Source: Insurance Council/ Health Insurance Policy site. < Legend August

66 Opinion Till we meet again The cooperative health insurance concept emerged as a strategic solution to a chronic problem faced mainly by the public health sector of the Kingdom of Saudi Arabia, particularly the Ministry of Health. The increasing medical services offered by the Ministry s hospitals have not been able to match up with the successively increasing demand for such services; in other words, it was impossible for the offer and demand to balance. Furthermore, the demand for medical services has started to take another trend; diversity. Given the fact that the government expenditure on the health sector does not exceed 3% of the national Gross Domestic Product (GDP), this has created a broad base of additional requirements which are far beyond reach. Henceforth, the health insurance has been found to be the most suitable method in dealing with the increasing demand on health services to relieve the burden shouldered by the government health sector. The first phase of the compulsory health insurance was applied to the expatriates in the Kingdom estimated at 8 millions. This has allowed the private medical sector to grow in tandem with the increasing demand. At the same time, it has relieved the government sector and allowed it to start its developmental procedures at highest quality standards, while extending supplementary specialized services to the relatively new private health sector. It also remains the only source for medical services in remote areas that lack the services of the private sector. Mohammed Bin Salman Al Hussain Assistant Secretary General for the Financial and Administrative Affairs The accession of the government medical sector to the health insurance tends to leash the rein of the increasing prices of the medical services offered by the private sector. The government sector does not aim to realize profits and as such the competition between the two sectors shall increase in offering the best services. Finally, the health insurance has medium and long-term strategies which may not be seen clearly at the beginning. The decision for its application is not magical wand to resolve problems that have accumulated over tens of years. We only need to be patient until the positive results of the health insurance have become reality. 66 THE COOPERATIVE HEALTH INSURANCE

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