Article 5 of the Saudi Insurance Control Law
المادة 5 من نظام مراقبة شركات التأمين التعاوني
The article prevents insurance and reinsurance companies, after beginning their business, from ceasing insurance business before the approval of the Saudi Arabian Monetary Agency.
Official text (Arabic)
This article has not been amended since the law was issued.
لا يجوز لأي من شركات التأمين أو شركات إعادة التأمين - بعد مباشرة أعمالها - التوقف عن مزاولة الأعمال التأمينية قبل الحصول على موافقة مؤسسة النقد العربي السعودي ، وذلك للتحقق من قيام شركات التأمين بعمل الترتيبات اللازمة للمحافظة على حقوق المؤمن لهم والمستثمرين .
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 5 explained in plain English
This article protects policyholders and investors from a sudden stoppage of an insurance company, and its provisions are:
- Who it addresses: insurance companies and reinsurance companies.
- The timing: after beginning their business, that is, after they have actually started to carry on the activity.
- What is prohibited: ceasing to carry on insurance business before obtaining the approval of the Saudi Arabian Monetary Agency, as the text names it.
- The purpose: to verify that insurance companies make the arrangements necessary to preserve the rights of policyholders and investors.
In practical terms, the company does not have the power to decide alone to leave the market; the supervisory body must first make sure that arrangements exist that preserve the rights of those who dealt with it. The article does not set out these arrangements or the procedures for requesting approval.
This article comes after Article 4, which makes each company specify the types of insurance it will carry on, and is followed by Article 6, which requires the approval of the Saudi Central Bank for nominating members of the boards of directors of insurance companies and their managers and holders of the senior positions it specifies. Anyone insured with a company that stops operating who fears for their rights should consult a lawyer who specializes in insurance and financial sector matters.
Practical example
An insurance company that has operated in Jeddah for years decides to stop its activity because of losses. It may not stop before obtaining the approval required in this article, which aims to verify the arrangements for preserving the rights of policyholders and investors.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 5 of the Saudi Insurance Control Law
May an insurance company stop operating whenever it wishes?
No. After beginning its business it may not stop carrying on insurance business before obtaining the approval of the Saudi Arabian Monetary Agency.
What is the purpose of requiring approval to stop?
To verify that the insurance company has made the arrangements necessary to preserve the rights of policyholders and investors.
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The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.