Insurance of Construction and Erection Projects in Saudi Arabia and Different types of Insurance Policies.

Photo by Mohammed Sadullah Khan - Massive Construction Project

As lot of construction activity is taking place in the Kingdom of Saudi Arabia. The following information will be useful to the Principals, Contractors, sub-contractors and other interested parties.

In most of the Civil Engineering or Machinery Erection Projects the Project Management faces the problem of fixing the responsibility for insuring the risks to which the project is exposed and for administering the insurance policies. The Project Manager and the Risk Manager has to assess the risks they face in the Project and shall have to make a decicion on the extent of insurance covers needed. Even when the other parties are obliged to insure various risks relating to the Project ultimately the cost will have to be borne by the Employer directly or indirectly.

2. THE EMPLOYER'S RISKS:

2.1. The Employer has the highest stake in completing the Project and hence in its insurance covers.

2.2. In most of the cases, contracts can be better dealt with by the Employer assuming the responsibility for insurance. The Employer should foresee contingencies such as insolvency of the contractor, default by the Contractors, suspension/ termination of the Contractor replacing him with another Contractor etc while providing the insurance requirements.

2.3. The factors in favour of the Employer carrying the insurable risks are:

(a) The Employer has to pay the premium either directly or indirectly (costs built in the contract price). By combining the insurance requirements of various Contractors the volume of premium will be high enough to secure better insurance terms from the market.
(b) The Employers has the highest stake in completing the project since his investment is exposed to the perils
(c) The Contractors tend to cover their exposure only
(d) Cover can be continued with the Fire Insurers for the completed sections
(e) No gaps or grey areas as in the policies procured by the Contractors
(f) Employer is protected in case of insolvency or termination of the Contractor and apponintment of another to complete the contract
(g) Employer is protected against under-insurance if the insurances are properly arranged
(h) Employer's insurance can take care of common facilities and utilities which may be used by many contractors
(i) Employer can cover the risks of price escalation and replacement escalation where as the Contractors will be unwilling to cover such escalation in price
(j) Coordination and completion of restoration works following a major loss to works carried out by different contractors will be easy if the indemnity is provided by one insurer
(k) Following major losses it may not be possible to replace a machinery with another one of the same kind due to changes in technology. Employer's policy will be able to deal with the situation better in such a contingency

(l) Employer is familiar with the local law and the import and customs law. Hence he can arrange protection needed to meet their reqirement.
(m) If the Employer purchases the materials and supplies the same to the Contractor for Erection disputes may not arise between the Marine Insurer (of the Employer) and the Construction Risk Insurer as to when the damage occurred (when the materials are not checked as soon as they land or at the site) if both risks are covered by the same insurer
(n) Administration of the insurance function will be easier and less expensive if the Employer effects policies including the interest of the Contractors and manages the risk using one centralised office for the whole project. Coordination will be easier with this type of centralised administration. This will also avoid time and effort spent on actions for recovery by different Insurers insuring different interests of the same subject matter affected.

2.4. Even if the responsibility for managing the risks is passed on to the Contractors and the Employer is named as an insured, the Employer will continue to carry the following risks:

2.4.1. MATERIAL DAMAGE AND LIABILITY:

(a) Loss, damage or liability arising out of faulty design of the works by the Engineer
(b) Loss or damage arising out of or aggrevated by the "excepted risks" such as the war, hostilities (whether war be declared or not), invasion, act of foreighn enemies, revolution, insurrection or military or usurped power,civil war, riot, commotion or disorder, ionising radiations or contaminations by radio-activity from any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel, radio-active toxic explosive or other hazardous properties of any explosive, nuclear assembly or nuclear component thereof, pressure waves caused by air craft or other aerial devices travelling at sonic or super sonic speeds, or any other operation of the forces of nature as an experienced contractor could not foresee, or reasonably make provision for (force majeure)
(d) Loss or damage arising out of riot, strike or civil commotion or disorder
(e) Loss or damage to the works or part of the works taken in to use or is occupied by the Employer
(f) Non disclosure or misdescription of any material fact affecting the risk or any material changes affecting the risk
(g) Loss or damage arising out of or aggrevated by wilful act or wilful negligence of the insured (Employer) or his responsible representative
(h) Loss or damage arising out of or aggrevated by cessation of work whether total or partial
(i) Loss or damge occuring after commencement of tests on the second hand machinery installed

2.4.2. MATERIAL DAMAGE SECTION:

In addition to the above risks mentioned in paragraph 2.4.1, the following risk are also to the account of the Employer even if the responsibility for insurance is passed on to the contractor:

(a) Financial, consequential and trade losses such as the loss of anticipated profits due to delayed completion of the project, additional capital to be invested due to escalationin the project cost, penalties, fines, failure to secure special priviledges from the authorities due to delays (eg. concessional customs duties available during a period), loss of the targeted market etc.
(b) Faulty design or defective material if these are supplied by the Employer
(c) Loss or damage to materials supplied by the Employer due to normal wear and tear, corrosion oxidation or other normal atmospheric conditions

2.4.3. THIRD PARTY LIABILITY:

In addition to the above risks mentioned in paragraph 2.4.1, the Employer is exposed to the following risks in case of bankruptcy or closure of the Contracting Company the following risk are also to the account of the Employer even if the responsibility for insurance is passed on to the Contractor, unless each of the following risks is adequately insured by the party directly liable for the loss under specific policies such as the Workmen Compensation Insurance Property All Risks Insurance, Aviation Liability Insurance or the Motor Vehicle Insurance.

(a) Legal liability to pay compensation for damages consequent up on accidental bodily injury to or illness of third parties not connected with the project work (whether fatal or not) and accidental loss of damage to property belonging to third parties occuring in direct connection with the erection, construction or testing on the insured project work and happening on or in the immediate vicinity of the of the site during the period of the cover
(b) Legal liability to pay similar compensation for damages to one party involved in the construction work caused by another party involved in the same contract work
(c) Liability consequent upon bodily injury to or illness of Employees or Workmen of the Principal, Contractors or any other Firm connected with the Project
(d) Liability consequent up on loss of or damage to property belonging to or held in care, custody or control of the the Principal, Contractors and any other Firm connected with the Project
(e) Liability consequent up on any accident caused by vehicles licensed for general road use or by waterborne vessel or craft
(f) Liability assumed by agreement unless such liability would have attached also in the absence of such agreement

(A) DAMAGE TO MATERIALS USED IN THE PROJECT:

Construction Projects involving Civil Engineering Works and Machinery Erection are exposed to the following risks:

1. Materials forming part of the construction work:

(a) Construction/ Erection Risks while carrying out exploratory and/ proto type testing works such as drilling of test bore holes, exploratory excavations etc

(b) Storage risks at the suppliers' and manufacturers' premises for imported and locally supplied materials which have already been sold but not delivered to the Contractor/ Principal
(c) Marine/ transit risks from the suppliers'/ manufacturers' premises to the site of erection for materials to be imported including the risks of incidental & or intermidiate storages
(d) Storages in bonded warehouses and/ or Project warehouses near the port of entry
(e) Transits to and from the fabricators premises outside the construction site (for materials procured by the Contractor/ Principal and sent for fabrication/ assembly/ further process prior to Erection at site)
(f) Risks during storage and fabrication/ assembly/ process at the intermediate fabricators premises mentioned in (d) above
(g) Off site storages and inland transit from such storage locations to the site
(h) Storage at site
(i) Storage risks of materials procured for contracted/ subcontracted work but in custody of the Principal/ Contractor waiting to be handed over to the Contractor/ Sub-Contractor
(j) Normal construction/ erection risk at site
(k) Risks due to defective material and/ or defective workmanship
(l) Risks due to faulty design
(m) Completed portion of the work handed over to the Contractor but not handed over to the Principal
(n) Completed sections taken over by the Principal but not taken in to use due to delay in completion of other sections
(o) Risks during testing of each section of the Machinery on load
(p) Integrated final testing of the complete line of Machinery on full load resulting in achievement of commercial production
(q) The period of test run on load
(r) Risks during the Period Of Maintenance
(s) Risks during the Period Of Guarantee

2. Materials used for or inconnection with the Project but not forming part of the work (temporary works not fully written of in the Project, Constructional Plant, Equipment and Machinery and Temporary Buildings such as Stores, Labour Camp etc):

(a) Risks during transit from the storage premises of the owner to the site of Erection/ Construction
(b) Risks during storage off site
(c) Transit to and from such storage location to site and back daily/ periodically
(c) Risks during storage at site.

3. Unless specifically insured a normal Contractors/ Erection All Risks Policy will indemnify the Insured the cost of rectifying or replacing the item affected to the extent insured provided the loss did not occur due to any excepted peril. Such cover is provided for items 1(g) and 1(i) above if only the total contract value is declared for insurance. Even for these the following losses and/ or costs are not covered unless specifically agreed at the inception of the policy:

(a) Architects, Surveyors and Consulting Engineers Fees to be incurred for reinstating the damaged property
(b) Riot, strike and civil commotion risks
(c) Cost of removal of debris following an indemnifiable damage to the contract work
(d) Express freight (other than air freight) for replacements/ spares following an occurrence
(e) Overtime, night work and holiday wages for repairs/ replacements following an occurrence
(f) Air freight for replacements and spare parts to be procured following an occurrence
(g) Additional customs duties for replacements/ spares to be procured following an occurrence
(h) Escalation in prices of replacements/ spares to be procured following an occurrence (escalation may be due to inflation, incresed demand, reduced supply, increased cost of production, exchange rate fluctuation, original discounts not available for replacements etc; estimation of this should be based on the replacement cost of the project following a major catastrophic loss at the end of the construction period)
(i) Escalation in the cost of the project due to the reasons stated in (h) above (limit of indemnity being the Escalated Project Value)
(j) Cost of new parts for repairing second hand machinery and equipments
(k) Loss of or damage to existing or surrounding property (not forming part of the contract work) caused by the construction work
(l) Cost of removal of debris following land slides/ erosions and the cost of repairing the erroded slopes
(m) Cost of replacement with newer/ improved model of the machine in the place of the destroyed (total loss) machine when the same model or its equivalent is not produced any more
(n) Financial losses such as the loss of expected profits to be generated caused by the delay in completion of the project on account of an indemnifiable material loss or damage
(o) Guarantee for the works following the maintenance period (5 years or 10 years guarantee for Buildings and Civil Engineering Works and additional 1 or 2 years guarantee for Machinery)
(p) Loss of or damage to the Material Handling Equipments and other Machinery when they are being used for the Construction/ Erection activity after such equipments have been installed unless such equipments are insured as "Construction Plant and Machinery" for the period they will be used for the erection work by the Contractor or the Principal. Such equipments should also be insured as part of the Contract Work (the Contract Work sum insured also should include the value of such equipments) if such equipments will be taken over by the Principal as a part of the Main Project). An example is a gantry crane installed in a production bay and used for lifting the production machinery during installation.


(B) LIABILITY TO THIRD PARTIES ARISING OUT OF THE WORK:

Third party liability risks to which the Principal is exposed to are:

Liability for accidental bodily injury or illness and for accidental loss of or damage to property caused by

(a) The Principal or his representatives and employees to Third Parties and the Property of Third Parties not connected with the Project
(b) The Principal or his representatives and employees to other Parties engaged in the Contract Work and to their Property

Liability for accidental bodily injury or illness and for accidental loss of damage to property caused by

(a) The Contractors and other parties employed by the Principal in connection with the Construction/ Erection Work to third parties not connected with the project
(b) Any of the Contractor or the other parties employed by the Contractor in connection with the Contract Work caused to another party or another Contractor employed for the same project

Liability for loss of or damage to property in care, custody or control of the Principal

CHECKLIST FOR RISK MANAGERS OF CONSTRUCTION/ ERECTION PROJECTS:

DESIGN & CONSULT:

Insurance cover for Architects, Design Engineers and Consulting Engineers:

(a) Professional Indemnity cover to be producured by the Architects, Design Engineers and Consulting Engineers: limit of indemnity to be specified by the Principal depending on the exposure

Name of the specialist Period of cover Limit of indemnity


(b) Personal insurances for these officials and their assistants:

Cover Period of Limit of Schedule of
required insurance indemnity items

Motor vehicle insurance
Workmen Compensation insurance
General liability insurance

Insurance covers for the employer/ principal:

(a) Contactors all risks and third party liability covers including the following extensions:

Risks to be covered:


Insurance covers for the contractors and the sub contractors:

(a) Marine/ inland transit cover for materials supplied
(a) Contractors all risks and third party liability covers including the following extensions
(b) Plant all risks cover
(c) Motor vehicle insurance
Cover to include:
(d) Workmen compensation insurance
(e) Medicare and personal accident covers
(f) Bonds
(g) Fire and perils covers for off site accommodation, offices, warehouse buildings etc (permanent buildings taken on lease and the contents not absorbed in the contract price)
(h) General liability cover

Courtesy - S A Khan, General Manager, Creative Associates

Medical Insurance in Saudi Arabia Mohammed Sadullah Khan

Historically Insurance has been in existence for over three centuries in this world.  Due to its enormous growth it has been classified into various classes depending upon the type and nature of the risk involved.  The major traditional classes of insurances are Medical, Motor, Property & Marine.  It is found that Medical together with Motor forms almost half of the insurance portfolio to the total insurance business. These classes of insurance are also known as attrition class of business as losses do occur with regular frequency. Medical insurance is more prone to attrition than any other class of insurance.

In Saudi Arabia, insurance is being sold for almost over half a century.  In the recent past Medical insurance was being written by Medical Insurance companies, General Insurance companies and Life Insurance companies.  There are international brokers, local brokers and agents also selling medical insurance.  Other type of providers have emerged to manage the bulging Medical portfolios, they are Third Party Administrators and Consultants. In Saudi Arabia we have independent TPA and in-house TPA. We also have independent consultant and some times Brokers take the role of a consultant. But the majority of Medical Insurance is being done directly by the Insurers.

NCCI was enjoying the monopoly of being the only registered Insurance Company in Saudi Arabia. But Malath Co-operative Insurance and Re-insurance has broken the monopoly by become the first among non-NCCI companies to be registered. However this is a new company with very little experience in the Insurance Industry. There are many seasoned companies along with the new entrants awaiting clearance of registration.

The decision of the government to regularize Insurance companies under SAMA, was a major decision towards regulation and development of Insurance Industry.  The regulation was a comprehensive one requiring all the players in the market to get the necessary licence to operate with the minimum fees and deposits. Prior to the current regulation there were more than 80 insurance companies operating in the Kingdom.  However post licencing, these companies will be reduced to less than half. The remaining either have closed their operations, will be closing or merged with other companies.

The Motor Insurance was made Mandatory on 20^th November, 2002 fuelling the growth of Motor Insurance. Council of Co-operative Health Insurance was formed on 11/08/1999 to regulate the mandatory medical Insurance.  The first phase of health insurance, which was applicable to over 500 expatriate employees was made mandatory last year and the second phase applicable to over 100 expatriate employees during the early part of April this year.  This has increased the insurance awareness among the entire community.  Even-though the compulsion is for expatriates only but most of the companies are including their Saudi staff under Insurance. The over-all Saudi Insurance market is currently estimated at SR 5 billion. The potential for health insurance alone is more than SR. 20 billion and is expected to be achieved within next few years.

In the past many hospitals and clinics have suffered due to defaulting Insurance Providers. Very recently we have seen the closure of SACIR and Methaq, who were heavily into Medical Insurance.  Millions of riyals were lost by the hospitals due to unpaid bills by these operators.  The current regulation will protect the interest of all parties involved in Insurance.

Many hospitals are not happy with evaluation of claims by the insurance company doctors. These refusal of claims have become bone of contention between the hospital doctors and insurance doctors. The Insurance doctors need to trust the prima facie evidence of the treating doctor. The treating doctors some times end-up being dictated by the insurance doctors and end up losing their professional independence.

There are many companies specializing in Medical Health Insurance in Saudi Arabia.  For groups it is easy to get Insurance. Some of the staff, who are on deputation basis will have their own international Insurance from the companies in their own country. However if individual want to buy Medical insurance then he will have limited choices.  The cost of health insurance hovers between SR. 800 to SR. 4,500.  The main factors built into rating are sum insured, room type, network of hospitals, dental, pre-existing, repatriation of mortal remains, optical, maternity, international coverage, age of the insured, deductible, claims experience and group size etc.

Current basic CCHI coverage is standardized to make the insurance uniform and it has certain inherent advantages like compulsory coverage to a limit of SR. 250,000, dental coverage, vaccinations as per the MOH, optical and maternity.  The number of exclusions are less and well defined.  The basic room requirement is Semi-private room.  The difficult area is the deductible part which is 20% of the claims amount subject to a maximum of SR. 100.  In this area customers have ended up paying upto SR. 300 due to lack of understanding on various parties involved.  However as the scheme progresses further, the awareness will increase and there will be less mistakes. Insurance companies have already found a way to beat this deductible issue by issuing policies with fixed deductible. The basic intention of the CCHI coverage is to take care of treatment in Saudi Arabia hence some of the areas on which a general expatriate patient rely are not covered under the current wording of CCHI.  There is non-network Saudi Arabia and world-wide exclusion unless the treatment is Emergency in nature. Medical Insurance is still in evolutionary process and it may take some more time till it stabilizes.

On part of customer, they should realize that everything is not insurable and there are always some gaps in the insurance.  Too often it has been found that the customer either does not get the expected service, receptionist is slow, doctor is late or does not prescribe the medicine suggested by the patient and the blame goes to the Insurance Company.  In certain cases genuine problems are faced by the customers.  Certain companies try to seek approval for even small test which will consume the time of the patient and even after wasting the time the net result will be the denial of that particular test. Certain brands of drugs are not allowed by some Insurance companies, hence they suggest the treating doctor to provide with generic names of the drugs.  These generic names of the drug will give leeway for the Pharmacist to give the drug of his choice or the synonymous drug of cheaper variety, thereby causing dissatisfaction to the customer.

Apart from the factors mentioned above, the buyer should look into the strength of the company, its affiliation, flexibility and its payment record with the hospitals.  Buyer should also be aware of any fine prints, inner limits, geographical scope, non-network coverage, limitation of claim submission, general exclusions and practical difficulties before making any decision to go ahead with a particular policy. A 24 hour helpline is certainly a useful aspect of service by Medical insurer and should not be over-looked. As with all the buying processes the universal truth "Caveat Emptor" should not be ignored.

Mr Mohammed Sadullah Khan, an MBA, Fellow of Insurance Institute of India and an Associate of Chartered Insurance Institute of U.K., with more than 20 years of experience in the insurance industry — 12 of which have been in Saudi Arabia, is experienced in all classes of general insurance with special emphasis on property, medical, motor and bancassurance. He can be contacted at mosakhan40@yahoo.com

3rd - Saudi Insurance Summit set to begin Today - 17-05-2009

Finally the long awaited 3rd Insurance Summit, 17-20 May 2009 is set to begin at the Riyadh Marriott Hotel, Riyadh today. The summit is being held amidst the growing global recession crisis.

The opening address will be given by the dynamic HE Mohammed Al Jasser, Governor of SAMA. It will be followed by the panel discussions and presentations by various leading personalities of the Insurance Industry.

In Saudi Arabia the Insurance Industry is going through a phase of regulation. The government had made the Medical and Motor insurance as Mandatory. The regulation scenario has brought about a new type of competition. Insurance Industry in Saudi Arabia is still grappling with the lack of well qualified and professional staff.

The hunger for business has fuelled the insurance companies to go all out for any kind of business without looking into the consequence. The Risk Management, main domain of Insurance Industry has taken a back-seat. 

During the first two days of the summit, the focus will be on many issues including the state of Saudi Insurance Industry, co-operative Health Insurance, effect of Global financial crisis, Bancassurance and Risk Management. Another new element which is being seriously looked into is the Takaful Insurance, a concept which is being adapted throughout the world. The speakers are drawn from Saudi Arabia, Middle East and Europe.

Dr. Saleh J. Malaikah, Chairman, SALAMA had said, "With enormous untapped potential, the insurance market in Saudi Arabia continues to flourish and is poised for impressive growth in the coming years. Recent studies have shown that the KSA market for Sharia-compliment insurance will be worth US$4 billion in 2010, and forecast that the Islamic insurance (Takaful) market will grow five-fold over the next 10 years. The Third Saudi Insurance Summit will provide timely opportunity for reflection, discussion and decision-making -- helping all attending to take the insurance market forward in challenging but opportunity-filled times."

Mr. Mohammed Sadullah Khan, an Insurance Expert and the Faculty Member at The Institute of Banking, was upbeat about the summit and opined that this will provide an ample opportunity for the Insurance Industry in Saudi Arabia. This will also serve as a platform for networking and help the Insurance Industry to move forward and make them look at the challenges with a 360 degree vision. In the current scenario the Insurance Industry is facing a shortage of qualified Manpower. Saudization will help the Industry if a proper training program is put in place. Insurance is not like trading, it is highly technical Industry. Without understanding the intricacies of Insurance, it will not be possible to run a mutually beneficial organization.

Shujaath Ahmed Khan, is a freelance writer and can be contacted at shujaathahmed@yahoo.co.in.

Insurance in Saudi Arabia and booming Saudi Arabian, GCC Insurance Markets

By Shujaath Ahmed Khan

The increase in oil prices with the price crossing the magic figure of US $ 100 coupled with increase in the population of the Saudi Arabia and GCC has contributed to the growth in the business activity. Lots of contruction activity is taking place throughout the Gulf countries, which has contributed to growth in Insurance premiums. The compulsory Medical and Motor insurances has also fuelled the increase in the volume of premiums. Today we find that Insurance Industry is gearing into cope with the flooding business enquiries and some are entering into new forays.

The compulsory Medical Insurance in Saudi Arabia is in second phase and expected the enter any time into third phase. Currently it is essential that an insurance company uploads the Website with the member's list inorder to process Iqama renewal and any amendments to Iqama. Whereas Motor certificates are being insisted during registration of Motor vehicles and at the time of transfer of vehicles.

Registration of the Companies is still in progress and the companies not registered in the Kingdom of Saudi Arabia will have to stop dealing in insurance activity. New companies which have registered with huge capital base are now finding it difficult to get the business. There is a reduction in Medical premium and companies are trying to enter into Personal Lines Segment. This will further soften the market. The more competition will give rise to low premium rates and reduction in profit margins. CCHI is expected to take hard action on defaulting companies. Customers are still working hard to get the right deals for the money spent.

Interview with MR. MOHAMMED SADULLAH KHAN, Institute of Banking, Saudi Arabia

Interview with Mr. Mohammed Sadullah Khan, Senior Faculty Member, Insurance Studies Unit, The Institute of Banking, Saudi Arabia, Conducted by S G Afzal Biya Bani, Resident Editor, The Insurance Times, Saudi Arabia

Mr.Mohammed Sadullah Khan is currently working as Senior Faculty (Insurance) at Institute of Banking, IOB Riyadh, Saudi Arabia. He is a direct recruit of New India Assurance,1989 batch, he worked as Regional Business Development Executive for over 14 years with Royal and Sun Alliance Insurance Company Saudi Arabia.

He is a Fellow of Insurance Institute of India and Chartered Insurance Institute, UK. Mr. M. S. Khan was University Topper in MBA (Marketing) and is a well-known Insurance professional in Middle-East. He is a prolific writer and the author of two books on Insurance – “Savings on Motor Insurance” and “Reinsurance for Beginners”.

Before we start off today, I would like to thank you for joining us this afternoon for this exclusive interview which is on (NRI) Non-Resident Indian Insurance Professionals.

Please tell us about your Institute of Banking (IOB) background?

The current name “The Institute of Banking” was coined in the year 1989. But the Institute was initially established by the Saudi Arabian Monetary Agency in 1965.

As you are aware that the Saudi Arabian Monetary Agency is the Regulatory body for Banking and Insurance Sectors and they have been doing a very good job diligently in maintaining the credibility of the financial Institutions.

Initially the institute’s main focus was on the conventional academic education.  With the acceleration of the development of the banking business and the increasing introduction of advanced technologies in the banking sector, it became essential to change the Institute’s goals and strategies to respond to such changes and to cope with the expectations of the leaders of the banking and financial sectors.

Institute of Banking is delivering more than 400 training courses in a variety of subjects, such as Banking, Investments, Management & Marketing, Information Technology, Capital Markets, English, Soft skill and Insurance etc.

When did you join the Institute of Banking (IOB) and how?

Joining IOB was my second stint in Saudi Arabia. I joined Institute of Banking on 14 March, 2009.  Prior to this I worked for Royal & SunAlliance from 1994 till 2008.

Being a direct recruit belonging to 1989 batch of New India Assurance Company and working at Mumbai gave me an excellent exposure to almost all areas of Insurance. I was the founder and writer for an “Insurance Q & A column” for one of the leading English dailies of Saudi Arabia.  Through those columns I came in contact with IOB.

Can you specify the courses offered by your Institute and what is the language of Instruction?

Our Institute offers a large number of courses in various Financial areas and English language.  Almost all our (other than English as a language) courses are offered in Arabic and English.  More than 90% of our courses are in Arabic. I would like to mainly focus on Insurance Subjects.

As far as Insurance topic is concerned, we are the sole provider of Insurance Foundation Certificate Examination (I.F.C.E.), it is a mandatory examination for the specified employees working in the Insurance Industry.

We are also responsible for building the material for this examination, provision of Certificates and maintaining of records.

We also provide training for IFCE course, other than this we are also offering training programs and certification in various other subjects such as Motor Insurance, Property Insurance, Protection & Savings Insurance, Liability Insurance, Health Insurance, Essentials of Underwriting, Reinsurance, Principles of Insurance.

We are also running a 2 year Diploma Program in Insurance in Arabic, courses for Diploma in Broking and Diploma in Loss Adjusting.

What is the procedure for Individual Registration for IFCE Exams and the Fees structure?

IFCE being a mandatory examination, one of the pre-condition for registration for IFCE examination is that an individual should be working for an Insurance Company or provider.

The registration process is simple and can be done online through IOB website.  The fee’s for a first take of IFCE exam is set at SR. 1,000, and any retakes thereafter is set at SR. 500.  These fees are non-refundable and non-transferable.

What is the passing marks and pass percentage of students appearing for IFCE examination?

In-order to pass the IFCE examination one has to obtain a minimum marks of 70 out of 100, which is 70%. There was initial resistance for IFCE examination.

One of the main reasons for this resistance was the rate of failures.  During early period the pass percentage was less than 20% but now it has improved and is above 60%.  The passing of IFCE examination has encouraged many candidates to pursue further studies in Insurance Subjects.

We would appreciate if you could give your advice to our readers, who are IFCE aspirants?

IFCE and Insurance Education guidance has become my passion.  Many known and unknown faces have benefited from the guidance. The current pattern of IFCE examination is bit easy.  People with experience often fail because of their experiences.

They have to identify three things, what they do at their office is the practice and what we read in the book are principles.  Then there is Regulatory requirement.

Hence when understanding principles they should keep their practices aside. They have to keep their understanding of the subject in three compartments practice, principle and regulatory part.

The examination is of multiple choice questions (MCQ), hence the book prescribed by IOB should be read from first page to the last page and that too word by word.  There should be a minimum of 3-5 readings of the whole book with understanding.

If you get hold of 100 sample test questions then you should work on that test only after you are thorough with the subject, until then avoid any kind of sample test.  The sample test result will be able to provide you with your level of learning.

In case of difficulty a full-fledged course will always be helpful. After you complete your IFCE, you have to think this only as a stepping stone and move towards gaining other Insurance Certifications.

For Indians I suggest them to go for Licentiate Examination of Insurance Institute of India, at the earliest. I always suggest my other students to first go for local certification if available, then at a later stage they can think of International certification.

For those students who do not have local certification can directly go for the International certifications

Do you have any tie-up with any International Insurance Institutes or Charters?

Our main focus is to provide a high quality education, training and development programs to our students. We always strive to bring the best available courses on the table.

Currently we are offering courses related to two Diploma’s one in Insurance Broking and the other one in Loss Adjusting in collaboration with ANZIIF (Australian & New Zealand Institute of Insurance and Finance).

We are also working with other Professional International bodies to bring in the best quality education to Saudi Insurance Market.

Do you have any plans for tie-up with the Insurance Institute of India, Mumbai or NIA Pune in near future?

My first Insurance qualification was from the Insurance Institute of India (III) and I am also a Fellow of Insurance Institute of India.  I have high regard for III.  I will be happy to have some kind of tie-up between IOB and III.  We have already taken a step towards building mutual co-operation for the benefit of Insurance Industry in Saudi Arabia. In this respect we are planning to visit India shortly.

Are there any specific courses for training Insurance Intermediaries in Saudi Arabia?

We do offer courses leading to Diploma in Insurance Broking. We also anticipate a licensing arrangement for the Insurance Intermediaries in near future.  We are working on courses which are suitable for Insurance Intermediaries and qualifying in these courses may help them, if licensing system comes into force.

Are you conducting any Seminars and workshops for the benefit of Insurance Industry?

We believe conducting high level workshops and seminars will help the Industry.  It helps in enhancing the knowledge of the participants, team building, exposing the services, creating a platform and networking.  We have conducted few workshops last year.

We had conducted our First Saudi Insurance Symposium in the year 2011 and I was one of the organizers and the speakers at that event.  We will be conducting Second Saudi Insurance Symposium on 26th and 27th of February this year. This time I will be one of the Panelists on Human Capital Development.

Do you have the provisions for web based training?

Currently we do not provide web based training facility. But we do understand the need for web based training, we will be having a look into it at the appropriate time.

What is your opinion about the awareness of Insurance courses in Saudi Arabia ?

Before the regulation of Insurance in Saudi Arabia there was very low awareness about Insurance courses and Certifications.  Very few expatriates were able to pursue their goals of Insurance education in Saudi Arabia.

CII courses and III courses were equally popular.  Now due to mandatory Insurance Foundation Certificate Examination (I.F.C.E.) and Saudization drive there is more demand among all towards furthering Education and Certifications.

Do you have any other initiative or future plans for Professionalism in Insurance? What do you think is the best course of professional development for Saudi Insurance Industry?

We at the Center of Insurance Studies strive to provide internationally accredited academic and professional insurance programs, certificates, and diplomas.  We also do continuous assessment of the insurance educational needs to develop and enhance our educational solutions through research, training, and development.

One of the foremost initiatives is to get the prior learning exemptions to our certificate IFCE from Internationally reputed Organizations.

I feel that the Insurance Industry in Saudi Arabia is still in its infancy stage. During next 3-5 years there will be more demand for professional insurance certification.  Currently apart from IOB, there are few private institutions and universities which are offering Insurance courses.

But I feel that during next few years there should be a local body, which should offer professional development and certifications to the Insurance Industry personnel, which will work on similar pattern to Insurance Institute of India.

Finally, would you like to share few memories of your Insurance professional life with our readers?

My Insurance profession memories are embedded with my experience of getting selected by New India Assurance Company in the year 1989, as a direct recruit, their memorable induction training program and working at one of their busiest branches in New Mumbai till l994.

Being a focal point between rural and biggest urban conglomerate had a rich experience of understanding, training staff, multi-dimensional problem solving, providing covers, handling claims, identifying fraud and addressing it for a range of products from Bullock Carts to CAR policies for Railway station.

Exposure to a variety of demanding and nice customers, bosses and employees was one of the best experiences I could ever gain.

The weather, hilly tracts, unpredictable and incessant rains, silvery lines in the green and wet mountains, walking amidst all kinds of weathers and environments helped me in working like a workaholic. Those were the really unforgettable lingering memories of my Insurance Professional Life.

Thank you very much sir for your precious time and sharing your views – S. G.. Afzal Biya Bani