Document Sample
January 2009, Issue 4

Global crisis: immunity or
limited impact?
                                CORPORATE PROFIlE
                                Allianz Saudi Fransi:
                                Local knowledge, global
                                reach and expertise

                             ThE KIngdOm’s wAR
                               AgAInsT smOKIng
          dr. Abdullah Bin Ibrahim Al-sharif
Secretary General of the Council of Cooperative Health

                 Asst.Editor In Chief
              mohammed s. Al hussain
       Asst. Gen.Secretary of Admin & Finance
                                                                           Editor’s note
   of the Council of Cooperative Health Insurance

              Consulting Committee:                                        We are pleased to present in this issue an exhaustive interview with
       dr. mansour Bin nasser Al-hawasi                                    the Kingdom’s Minister of Health Dr.Hamad bin Abdullah Al-Mane
       Deputy Minister for Executive Affairs                               who speaks about the importance of cooperative health insurance as
Member of the Council of Cooperative Health Insurance                      well as the Ministry’s strategy to improve the country’s health services.
                                                                           The Minister’s interview is an indication of the high-level recognition
     dr. mousaa’id Bin mohammad Al-salman
Dean of the Faculty of Medicine, King Saud University
                                                                           of the important role of this magazine in raising insurance awareness
Member of the Council of Cooperative Health Insurance                      in the country.
                                                                            Dr. Al-Mane enlightens us about how the Ministry, the organizations
       mr. sami Bin Abdullah Al-moubarak                                   under it and other government departments are working with the Coun-
 General Director of the Bureau of Labor in Riyadh                         cil of Cooperative Health Insurance to ensure the success of the national
Member of the Council of Cooperative Health Insurance
                                                                           health insurance program.
The general secretariat of the Council of Cooperative                       Our Cover Story focuses on the Kingdom’s all-round efforts to curb the
                 health Insurance                                          bane of smoking and the relationship between smoking and insurance.
            PO Box 56371 Riyadh 1154                                       It also provides details of the Ministry of Health’s court battle against
                Phone: 920001177                                           the tobacco companies and their representatives in the Kingdom. The
                  Fax: 014870071                                           Ministry is claiming around SR 127 billion in compensation from the
                                                                           tobacco companies.
              Published on behalf of:                                       The prevailing global economic crisis raises the inevitable questions
    The Council of Cooperative health Insurance
                                                                           as to how the insurance companies in the Kingdom, which are linked
                                                                           with international insurance companies in terms of reinsurance contacts,
                                                                           would be affected. In the Finance and Investment section, we speak to a
                                                                           few industry players to find out.
                                                                            This issue explores Japan’s experience in implementing health insur-
                                                                           ance. Another article looks at the emergence of social responsibility as
                                                                           a key corporate agenda. The Travel pages take us on a trip to Sharm
                                                                           El-Sheikh in Egypt while the Lifestyle feature on Rolex checks out the
                                                                           brand aura.
       managing director:          Rabih Al-Amine                           This issue inclues the usual variety of features and profiles as well as a
                                                                           few guest articles from individuals active in the insurance sector.
       Editor-in-Chief:            Mustafa Shehab
       Associate Editor:           Amira Hamadeh

       Editors:                    Hani Nadim
                                   Said Al-Hasanieh

       graphic designer:           Hussain Mohamed Al-Bakri

       P.O. Box: 301292 Riyadh 11372, phone: 0096614623632

      The reproduction or reprinting of any part of this magazine
      must have the express permission of the publisher, who
      reserves the right to initiate legal action against any violation.
    Insurance news                         6                                                Corporate Profile                   14    Interview                         38
    The Council of Cooperative Health                                                                                                 Saudi Minister of Health and
    (CCHI) has issued a statement                                                           Allianz Saudi Fransi (Saudi Fransi        Chairman of CCHI, Dr. Hamad bin
    explaining that it is the responsibility                                                Cooperative Insurance Company)            Abdullah Al-Mane, says in a special
    of the employer to bear all the health                                                  draws strength from its local             interview that the Kingdom wants
    insurance expenses of the employees                                                     knowledge and global expertise and        to ensure quality healthcare for all
                                                                                            experience                                residents.

                                                                                                                                                                              Technology                          42
                                                                                                                                                                              The Kingdom’s new medical insurance
                                                                                                                                                                              portal offers multiple benefits to all

    Perspective                          18      hot Topic                           20     social Responsibilty               24                                             Travel and Tourism                   48    lifestyle                         54
    Insurance is all about managing risks. The
                                                 Health insurance and job satisfaction:     The CSR challenge:                                                                Sharm El-Sheikh, the modern Red Sea
    concept of risk management originated                                                                                                                                                                                Rolex, the brand that symbolizes style
                                                 There is an undeniable link between        Corporate Social Responsibility has                                               city on the Gulf of Suez and Aqaba,
    in early 20th century as a special                                                                                                                                                                                   and luxury,
                                                 employee health and job satisfaction       gained new respectability in recent                                               offers plenty to the fun loving tourist:
    approach to managing industrial projects
                                                                                            years in board rooms and among                                                    scenic beauty, yacht trips, diving,
                                                                                            senior executives                                                                 fishing, snorkeling and of course great
                                                                                                                                                                              views of rare underwater treasures

                                                 Cover story                         28     Program                            34     Report and Analysis              58     Around the world                     62

                                                 The Kingdom’s war against smoking:         Sanad offers multiple insurance           CCHI’s first annual report provides     A review of the emergence of the
                                                 The five-year national plan begins to      policies to support diverse needs of      a comprehensive overview of the         modern Japanese health insurance
                                                 yield results; Ministry of Health deter-   clients, and says it strives to live up   Kingdom’s health sector, and says the   system, which is considered one of
                                                 mined to nail tobacco company agents       to its Arabic name, which implies a       value of insurance premiums is likely   the best in the world.
                                                 in court                                   binding contract to protect the rights    to exceed SR 5 billion in 2009
                                                                                            of signatories

4                                                                                                                                                                                                                                                                 5
                                                                                                                                                                                                                                     Insurance news

    CChI, government departments discuss                                                                                             Al-shahrani receives Ideal Employee Award
    health insurance for saudis in private sector                                                                                    The Secretary General of the
                                                                                                                                     Council of Cooperative Health
                                                                                                                                     Insurance (CCHI), Dr. Abdullah I.
    The Secretary General of the Council        and the role of different government                                                 Al-Sharif, recently handed over the
    of Cooperative Health Insurance             agencies.                                                                            Ideal Employee Award for the last
    (CCHI), Dr. Abdullah I. Al-Sharif,           The agenda included an assessment                                                   quarter of 2008 to Mr. Fahad S. Al-
    recently met with representatives           of the current status of the employers,                                              Shahrani, Head of the Public Medical
    of several government departments           including large, medium and                                                          Installations Accreditation section at
    to discuss the implementation of            small enterprises and strategies to                                                  the Department of Accreditation and
    compulsory health insurance for             create awareness among the target                                                    Follow-up at the Secretariat General
    Saudi citizens working the Kingdom’s        subscribers.      The meeting also                                                   of the Council.
    private sector. The meeting, held at        discussed the demand and level of                                                     The award was given on the basis
    the Council’s headquarters in Riyadh,       cooperation of employees subscribing                                                 of the results of the nominations
    was attended by representatives of the      to the program, and the level of                                                     of the committee concerned. Al-
    Passports Department, the National          services and cost.                                                                   Shahrani won the award after scoring
    Information Center, the Ministry of          Thanking the participants, Dr. Al-                                                  the highest points in several internal
    Labor and insurance companies.              Sharif said the Council considered                                                   competitions.
     The meeting discussed the regulatory       them as partners in implementing the                                                  Dr. Al-Sharif pointed out that the Ideal
    requirements related to the inclusion       program. He noted that the Council                                                   Employee Award is intended to encourage
    of Saudi citizens employed by the           greatly appreciates its relations with                                               CCHI      employees,    improve      their
    private sector, such as the timetable for   the agencies and has tried to strengthen                                             performance and create a spirit of healthy
    implementation, control mechanisms          such partnerships over the years.                                                    competition and loyalty among them.

    Clarification on health Insurance
                                                                                                                                     sCFhs ready to implement malpractice
    for dependents
                                                The Council of Cooperative Health          erative Health Insurance Regulations      insurance cover
                                                (CCHI) has issued a statement ex-          which reads: “The employer shall pay
                                                plaining that it is the responsibility     insurance premiums for his contracted     The Saudi Commission for Health               The SCFHS move is expected to re-      the Royal Decree no. M/59 dated
                                                of the employer to bear all the health     employees and their dependents to the     Specialties (SCFHS) will start apply-        duce medical malpractices that have     04/11/1426 H. Article (41) of the
                                                insurance expenses of the employees        insurance company which he chooses        ing insurance to cover medical mal-          affected a large number of people       decree stipulates that “subscription
                                                and their dependents regardless of the     for this purpose. This provision ap-      practice as of 01/03/1430 H. (March          in recent years. Experts believe that   in the cooperative insurance against
                                                type of employment contract. The           plies to the unemployed persons they      28, 2009), says a report from Riyadh         medical malpractice in the Kingdom      medical malpractice is compulsory to
                                                clarification was issued as there have     support. The employer alone shall be      Chamber of Commerce and Industry.            is due mainly to the lack of experi-    all practitioners and dentists operat-
                                                been a number of enquiries about the       responsible for payment of the premi-     Medical practitioners’ registration          ence, lack of professional qualifi-     ing in private and public medical in-
                                                application of the regulations to de-      ums payable at the beginning of ev-       and re-registration requires insurance       cations, shortage of medical and        stallations”.
                                                pendents.                                  ery insurance year unless otherwise is    coverage of SR500,000 for surgery,           diagnostic equipment and patients        Two years ago the Ministry of
                                                 Mainly, the inquiries concentrated        agreed”. This coincides with definition   anesthesia and maternity specialties,        withholding important information,      Health proposed taking X-rays of all
                                                on the difference between contracts        (8) of Article (1) of the by-laws which   and SR 250,000 for other specialties.        which are important factors in diag-    patients who undergo surgery to en-
                                                on a single status and those on a fam-     reads: “Dependent refers to the hus-      The insurance coverage shall be com-         nosis and treatment.                    sure that operation was successful
                                                ily status. The Council said that the      band, wives and sons under 18 years       pleted under binding agreements be-           In its advice to the Chamber of Com-   and no medical instruments were
                                                employer bears all expenses of health      of age as well as unmarried daughters”.   tween the insurance companies and            merce, SCFHS pointed out that its ap-   left inside their bodies. According
                                                insurance except for pregnancy and         Article (12) of the by-laws reads: “The   the insured which will have a validity       plication of the insurance coverage     to unofficial statistics, the largest
                                                maternity expenses in case of single       insurance coverage includes pregnan-      period of 3-5 years. At the beginning        fees for medical malpractice responds   number of malpractice complaints
                                                status contracts.                          cy and maternity for employees con-       of this year, SCFHS had started to ap-       to the resolution of the Council of     was related to maternity, followed
                                                 This satisfies the requirements of Ar-    tracted on a family status within the     ply medical malpractice insurance on         Ministers dated 3/11/1426 H which       by general surgery.
                                                ticle (36) of the by-laws of the Coop-     limits defined in the policy”.            medical practitioners applying for li-       conveyed approval of the regulations
                                                                                                                                     censes or renewal of their licenses.         governing medical professions and

6       MUHARRAM 1430 | JANUARY 2009                                                                                                                                                                                THE COOPERATIVE HEALTH INSURANCE               7
                                                                                                                                                                                                                              Insurance news

    Tawuniya                             Economic slowdown delays                                                               Cooperative Insurance projected to grow to
    opens new                            AIg asset sale                                                                         $5.7 billion by 2015
    branch at                            The troubled American International          C.I.C. are negotiating to purchase an
                                                                                                                                Islamic insurance sector is projected
                                                                                                                                to achieve rapid growth in the
                                                                                                                                                                          The reports said that international
                                                                                                                                                                          insurance       companies       were

    Auto moto                            Group (AIG) is looking to sell its assets
                                         around the world as part of the US$ 85
                                         billion American government rescue
                                                                                      AIG business for an estimated bargain
                                                                                      deal worth US$ 10.8 billion. Each of
                                                                                      the four companies was reportedly
                                                                                                                                coming years, according to Arabic
                                                                                                                                media reports. Quoting industry
                                                                                                                                sources, the reports said growth rate
                                                                                                                                                                          considerably attracted by the growth
                                                                                                                                                                          in the Arab insurance market. The
                                                                                                                                                                          expert sources cited the fact that
    Center in                            plan. However, the current global
                                         economic circumstances are likely
                                                                                      negotiating separately with AIG to
                                                                                      buy its affiliate the American Life
                                                                                                                                is expected to reach 23 percent by
                                                                                                                                the year 2015 to become a $5.7
                                                                                                                                                                          international insurance premiums
                                                                                                                                                                          amounted to $3.7 trillion in

    Eastern                              to force the company to postpone
                                         any major sale. The company also
                                                                                      Insurance Company (ALICO) which
                                                                                      operates in 55 countries including
                                                                                                                                billion industry. Over the last five
                                                                                                                                years, a number of cooperative
                                                                                                                                                                          2006, indicating a growth rate of
                                                                                                                                                                          5 percent compared to the year
                                         indicated that there was a lot of            Japan where it earns more than half       insurance companies working in            2005, whereas the Arab insurance
    Province                             interest in its aircraft leasing business,
                                         International Lease Finance Corp.
                                                                                      of its profits.
                                                                                       AIG reported net third quarter loss
                                                                                                                                accordance with Islamic laws have
                                                                                                                                started business. These form about
                                                                                                                                                                          premiums amounted to almost $12
                                                                                                                                                                          million, indicating a growth rate
                                          Edward Liddy, the company’s CEO,            of US$ 24.47 billion which translated     10 percent out of a total of 300          of 15.5 percent in the same year.
                                         said in a December presentation to           into US$ 9.05 per share. This             insurance companies operating in          Islamic insurance companies work
                                         the American Chamber of Commerce             compared with US$ 3.09 billion in         the Gulf region.                          under Islamic law which applies
                                         in Hong Kong:              “The present      profit for the same period in 2007. The   Some sources estimate the growth rate     the concept of “takaful” (collective
                                         circumstances are too tight to start         losses included the write-off of US$      in the Islamic insurance sector in the    liability by dividing the risk among
    Tawuniya has opened a new            the assets sale. The sale plan may           7.05 worth of assets, in addition to      GCC countries at 30-50 percent. This      policyholders), rather than the sole
    branch at the Auto Moto Center       be changed and the announcement              US$ 25 billion market losses for debt     has proved to be a major attraction for   motive of making profit.
    in the Eastern Province to provide   of the sale may take two months or           guarantees incurred by the company        a number of international companies
    services that complement the         more”.                                       during the previous three quarters.       which were keen to invest in the Gulf,
    Center’s business.       Tawuniya     He said investors appeared to find          The company also incurred capital         and have established headquarters in
    said the move was in line with       AIG International Lease Finance Corp.        losses up to US$ 18.31 b during the       Dubai and Qatar.
    its strategy of expanding the        the most attractive among the assets         third quarter.
    national branch network to           on sale. It had been reported earlier
    support its growing customer         that insurance companies, including
    base. Tawuniya branch at the         AXA S.A., MET life, Prudential and
    Auto Moto Center caters to the
    needs of customers in the Eastern
                                         the Chinese Wealth Domination Fund
                                                                                                                                sAlAmA opens compensation
                                                                                                                                center in Jeddah
    Province by providing automobile
    insurance and other services.
    The branch is located between
    Al Khobar and Dammam, which
    makes it convenient for customers                                                                                           SALAMA (Islamic Arab Insurance            increase of more than 100 percent
    to visit.                                                                                                                   Company) recently announced the           in 2008, compared to 2007. The
     Auto Moto Center, the first of                                                                                             opening of its main compensation          company attributed this success to its
    its kind in Saudi Arabia and the                                                                                            center in Jeddah, dedicated to car        strong customer service culture across
    Gulf, comprises showrooms and                                                                                               accident compensation. The Center         the Kingdom and cited the opening of
    service centers for automobiles,                                                                                            will strengthen SALAMA’s customer         the new compensation center at its
    marine crafts, motorcycles and                                                                                              services. Customers can now go            Jeddah headquarters as an example.       in 1979 to meet the growing insurance
    accessories. Spread over an                                                                                                 directly to this dedicated center,         SALAMA is a Saudi joint stock           requirements of customers in Saudi
    area of over 100,000 square                                                                                                 present the required documents            cooperative insurance company. Its       Arabia and UAE. It was registered as
    meters, the Center boasts state-                                                                                            and receive instant services, as the      a wide range of “takaful” products       a joint stock company in Saudi Arabia
    of-the-art architectural design                                                                                             center employs specially trained          and services offer insurance cover for   in October 2006.
    and engineering services, to                                                                                                staff who facilitate and expedite such    health (medical), vehicles, property
    provide unparalleled support to                                                                                             transactions.                             and real estate, engineering and
    customers and visitors.                                                                                                      SALAMA said its tremendous growth        building activities, maritime and air
                                                                                                                                in Saudi Arabia had exceeded all          travel. SALAMA is a regional industry
                                                                                                                                expectations as sales volume saw an       leader that was established in Dubai

8    MUHARRAM 1430 | JANUARY 2009                                                                                                                                                                            THE COOPERATIVE HEALTH INSURANCE              9
                                                                                                                                                                                          Insurance news
                                                                                                                                                                                         Insurance news

     gulf Reinsurance limited rated ‘A’                                                  sABB chooses BUPA Arabia
     Gulf Reinsurance Limited (Gulf Re)        of the GCC. The operations of the
     has been assigned financial strength      institution will include reinsurance
     rating of ‘A-’ (excellent) and issuer     services through a wide range of
     credit rating of ‘a-’ by AM Best          property and accidents insurance
     Company, which is specialized in          products.
     rating insurance companies. The              “A.M. Best believes the company                                                  SABB (Saudi British Bank) has chosen       and health clinics. He noted that
     outlook assigned to both ratings is       will fully capitalize all operating                                                 the Arab insurance company BUPA            BUPA’s 24X7 direct communication
     stable, and AM Best said Gulf Re          profits up to at least 2013, which                                                  Arabia to provide medical insurance        center can be reached any time by
     is likely to maintain its strong risk-    will be sufficient to maintain strong                                               to its employees and their families        customers. “We also offer customers
     adjusted capitalization in its initial    risk-adjusted capitalization as the                                                 all over the Kingdom for a period of       the benefit of innovative electronic
     years.                                    company expands its business during                                                 three years.                               services such as, confirmation of
      Gulf Re, licensed by the Dubai           these years. Additionally, a further                                                Tal Nather, Executive Director             insurance approval through SMS
     Financial      Services       Authority   USD 200 million of capital is available                                             of BUPA Arabia, said that SABB             to customers’ mobiles, and instant
     (DFSA), operates out of the Dubai         at the holding company and can be                                                   chose BUPA Arabia because of the           web-based comprehensive services,”
     International Financial Center. The       transferred to Gulf Re if required,                                                 company’s excellent service through        Nather added.
     company’s activities will initially       enhancing the company’s capital                                                     an extensive web of hospitals
     focus on high value sectors, such as      flexibility,” the rating agency said.
     oil, gas, industry, public facilities,
     and transportation in the six countries

                                                                                         solidarity Insurance prepares to go public
     Bustan Middle East to be first Saudi                                                The Solidarity Saudi Takaful Company
                                                                                         is preparing to offer 40 percent of its
                                                                                                                                   to reach $15 billion.        This has
                                                                                                                                   motivated Solidarity to seriously
                                                                                                                                                                              Islamic insurance.
                                                                                                                                                                               According to Solidarity, the lack

     Insurance brokerage company                                                         capital, amounting to SR 555 million,
                                                                                         for public subscription in Saudi
                                                                                         Arabia in the first half of 2009.
                                                                                                                                   consider expanding its activities to
                                                                                                                                   Europe, through cooperation with
                                                                                                                                   established financial institutions
                                                                                                                                                                              of long-term fixed income products
                                                                                                                                                                              encourages banks and Islamic
                                                                                                                                                                              insurance companies to invest in the
     A Saudi businessman has established       construction which may endanger            The Saudi company belongs to the         wishing to provide Islamic insurance       Gulf real estate market, thus exposing
     the first Saudi insurance brokerage       the building and violation of the         world’s largest Takaful companies         services, although the company             itself to the price corrections typical
     company to offer specialized              construction contract in terms of         in the world, the Solidarity Group,       has a few apprehensions regarding          of this market.
     insurance coverage for ‘installations’.   specifications and standards.             which is a member of the Bahrain-         the obstacles it might face, such as        The Middle Eastern and North
     The new company, Bustan Middle             Al-Shalan said: “Our company             based Ithmaar banking group. It has       cultural barriers and the lack of long-    African      markets    are
     East for Insurance Brokerage,             provides insurance brokerage on           received the approval of the Saudi        term investment tools.                     among the regions with
     is a strategic partnership with a         installations, and we are the first       Arabian Monetary Agency (SAMA)             Holders of “takaful” policies do not      the lowest insurance
     specialized company based in Hong         company to offer this service in the      to become a public joint stock            pay insurance premiums; they donate        percentages in the
     Kong. Saudi Arabia’s share of the SR      region. To accomplish this, we are in     company, and has assigned PMG             money to a common fund which is            world. The average
     50 billion Gulf market is estimated       constant touch with local and global      Financial to oversee the initial public   invested in various instruments. . After   insurance premium per
     to be about 30 percent.                   insurance companies to come up            offering (IPO). Solidarity Saudi is       deduction of the sums claimed by           capita in that region
      Fawwaz Al-Shalan, the company’s          with a mechanism of insuring such         owned 33 percent by Saudi investors       participants, the benefits are divided     is US$25 compared
     founder, explains that Bustan will be     projects. We act as attorneys             and 27 percent by Bahraini partners.      among the policy holders. Obviously        to US$3500 for
     a regional player although its initial    for the contractors of project            The company is expected to invest         the fund investment process is also        the USA and
     focus will be on the Saudi market,        owners.”                                  the money raised from IPO for its         conducted in accordance with the           Japan.
     which holds tremendous business            Al-Shalan     says    the                expansion in the country.                 Islamic law.
     potential. The new company will           company is likely to                       The Solidarity Group currently            Islamic insurance is now geared for
     be headquartered in Saudi Arabia.         opt for a partial IPO at                  operates in Bahrain, Saudi Arabia,        rapid growth in the Middle Eastern
     The company will offer insurance          a later stage after its                   Qatar, Oman, Jordan, Malaysia             market which has been traditionally
     brokerage on construction projects,       initial objectives are                    and Luxembourg. It has said that          characterized by low insurance
     and will offer protection against         achieved.                                 about one-third of Islamic insurance      volumes. Its ascending popularity in
     accidents at the time of construction.                                              premiums will come from the               the West where people are looking
     It will cover the contractor’s losses,                                              Western countries by the year             for morally sound financial products
     unsuitable     materials   used     in                                              2020, achieving a 10-fold growth          - is expected to aid the growth of

10       MUHARRAM 1430 | JANUARY 2009                                                                                                                                   THE COOPERATIVE HEALTH INSURANCE                11
     Najm, licensed to attend traffic
     accidents, extends Riyadh coverage
                                                                                         Kingdom of Saudi Arabia
     Najm Company for Insurance
     Services, currently licensed to attend
     traffic accidents in parts of Riyadh,
     has launched its second phase of
                                                                                         Council of Cooperative Health Insurance
     expansion to cover six additional                                                   General Secretariat
     areas in the capital city: Al-Narjis,
     Al-Yasamine, Al-Aqeeq, Al-Sahafah,
     Hatteen, and Al-Malaqa.                                                             Alshafa Street, King Fahd Road.
      Najm recently signed an exclusive
     five-year agreement with the
                                                                                         Fax: 4870071
     General       Traffic     Department                                                P.O.Box: 94764 Riyadh 11614
     to attend traffic accidents and
     determine liabilities in all areas of
     the Kingdom. Al_Khobar, Dhahran
     and Dammam were covered by this
                                                                                                        Customer Service Center (IVR)
     service early last year, while Riyadh
     is in the process of being covered
     gradually. At this stage, the highway
     is excluded from coverage.
      The company’s CEO Miteb Al-
     Rowqi pointed out that the company
     is in the process of opening              unit encompasses representatives
     customer service and liability            of the General Traffic Department,
     evaluation centers in many cities         SAMA, the insurance companies
     of the Kingdom. This is in addition       representing the owners of vehicles
     to the centers that it has recently       involved in the accident, as well as
     inaugurated in the main areas of its      Najm. It provides legal advice and
     operations.                               technical opinions on the disputes
      Al-Rowqi reaffirmed the company’s        and is obliged to issue a report in
     neutrality in dealing with both           accordance with the provisions of
     parties involved in an accident.          the regulatory by-laws.
     This follows the overall concept           SAMA had licensed the company
     that the company’s objective is to        to act as a fiduciary and loss
     serve holders of insurance policies       estimating agency as well as to
     issued by SAMA-licensed insurance         achieve compromise and settlement
     companies       operating     in    the   of insurance claims. Najm’s role is
     Kingdom. Each party must be treated       to attend traffic accidents that do not
     equally and the liabilities must be       involve bodily injuries. Its services
     determined in a systematic manner         include determining liabilities,
     with the utmost transparency and          estimating damages and hauling of
     clarity.                                  damaged vehicles.
      Al-Rowqi pointed out that in case
     of any objection to the report or the
     company’s work, the aggrieved party
     may approach the concerned agency
     of the Traffic Department or the
     traffic accidents complaint unit. This
                                                                                         w    w     w    .    c    c       h   i   .   g   o   v   .   s   a
12       MUHARRAM 1430 | JANUARY 2009
                                                                                                                                                                                                    Corporate Profile

     Allianz saudi Fransi:
     local knowledge, global reach and expertise

            By Handi Nadeem
            Allianz Saudi Fransi (Saudi Fransi Cooperative Insurance Company) was
            established in 2007 as a joint venture between Banque Saudi Fransi and Allianz
            Group. Originally known as InSaudi Insurance Company, it was acquired by
            the new partners in response to the growing needs of Banque Saudi Fransi
            corporate clients for solid, reliable and world-class insurance coverage that
            would protect them against risks and unfortunate accidents.

                                                                                             InSaudi Insurance Company was founded          insurance sector. The company has since       Fransi is keen to support the development
                                                                                             in 1979 in Bahrain, and started its business   been focusing on developing its insurance     of the insurance sector in the Kingdom.
                                                                                             in Saudi Arabia about 26 years ago.            products and distribution systems to keep     It is with this objective that the company
                                                                                             The new company is thus in a position          pace with the requirements of the growing     launched a program to provide insurance
                                                                                             to leverage InSaudi’s quarter century of       domestic and international market.            training for fresh Saudi graduates.
                                                                                             experience in the Saudi market, along           Allianz Saudi Fransi has already secured       Building      strong    and     long-term
                                                                                             with the strengths of the two new world-       the license to operate in Saudi Arabia        relationships with clients is an integral
                                                                                             class financial institutions: the Banque       from the Saudi Arabian Monetary Agency        part of the company’s vision and
                                                                                             Saudi Fransi, which is part of the Calyon      (SAMA) after completing the required          objectives. The new name and identity
                                                                                             Group, and Allianz Group. Both partners
                                                                                             have tremendous experience in providing
                                                                                             modern financial and banking services
                                                                                                                                            The company has since been focusing on developing
                                                                                             in addition to insurance solutions and         its insurance products and distribution systems to
                                                                                             asset management. This combination is          keep pace with the requirements of the growing
                                                                                             central to Allianz Saudi Fransi’s objective
                                                                                             of offering comprehensive and integrated       domestic and international market
                                                                                             insurance solutions to companies and
                                                                                             individuals looking for higher levels of       formalities. The company describes itself     of Allianz Saudi Fransi is designed to
                                                                                             specialized knowledge and service.             as a “dynamic new force in the market,        capture the strong commitment of the
                                                                                                                                            focused on providing risk solutions in        partners. The rebranding is also aimed
                                                                                             dynAmIC nEw FORCE                              tune with the growing sophistication          at sending a strong message that the
                                                                                             It was at the outset of 2005 when Banque       of the Saudi market,” attributing this        company aims to develop new services
                                                                                             Saudi Fransi and Assurance Generale            confidence to its experience in the Saudi     on the basis of its new capitalization,
                                                                                             de France acquired InSaudi Insurance.          market, modernization, technology and         advanced     information     technology
                                                                                             The acquisition came in the wake of            in-house industry expertise.                  and human resources who have the
                                                                                             new Saudi legislations regulating the           Officials of the company say Allianz Saudi   experience and expertise in the sector.

14    MUHARRAM 1430 | JANUARY 2009                                                                                                                                                 THE COOPERATIVE HEALTH INSURANCE                     15
                                                                                                                                                                                                                                               Corporate Profile
                                     Allianz Group is a global leader in             Retirement Plan. The Income Protection
                                    insurance and asset management.                  insurance helps employees maintain
                                    Established in Germany in 1890, Allianz          their standard of living at times they are     Allianz Saudi Fransi also
                                    Group has a powerful historical legacy           out of work.
                                    rooted in tradition, and offers more than          Group Retirement Plan is another
                                                                                                                                    takes care to tailor Shariah-
                                    80 million customers a full spectrum             prominent protection plan, which offers        compliant products
                                    of services across its global network.
                                    The Group’s main fields of business
                                                                                     a saving strategy that helps prepare           specifically needed in the
                                                                                     for retirement, and is provided by the
                                    are: Protection (property and accident           employer to the employees. Both the            Saudi market
                                    insurance); Provision (life and health           employer and employee are involved
                                    insurance); and Performance (asset               in this retirement plan, which allows for      Saudi Arabia and other countries. This
                                    management and banking). The Group’s             increasing the savings so as to provide        coverage is available all over the world
                                    insurance premiums in 2007 reached               a bulk amount to the employee upon             upon request, including coverage of the
                                    up to about 95 billion Euros, while the          retirement, or a monthly or annual             expenses of returning deceased bodies to
                                    volume of managed assets was almost              income for a pre-determined number of          their home countries. The features of this
                                    1000 billion Euros.                              years. This program is designed for both       program include additional coverage for
                                                                                     Saudis and the non-Saudi residents in the      pre-existing diseases with no sub-limits, as
                                    POlICIEs                                         country, providing a full range of savings     well as a comprehensive range of optional
                                    Allianz Saudi Fransi’s emphasis is on            for investment, in addition to protection      coverage, including for childbirth, dental,
                                    providing integrated solutions for risk          levels. Workers, upon their exit from the      and ophthalmic care.
                                    management through a single point of             plan, can also benefit by drawing the            The critical illness insurance is another
                                    contact for various insurance needs.             accumulated capital.                           important product from the company that         entrepreneurial spirit is encouraged,
                                    This approach helps develop a special              The workmen’s compensation plan offers       complements the medical insurance. It           empowering Allianz Saudi Fransi to              The company’s extensive
                                    relationship with the customer by saving         cover which is not aimed at protecting         provides a lump sum payment of a pre-           develop products and services relevant          branch and service center
                                    time and strengthening communication.            the employee, but the employer against         determined amount in the event of the           to the risks and opportunities in the
                                    The company’s insurance offers are               the death or disability of their employees     employee contracting a specified disease        local market. The company is aiming to          network is another strength
                                    categorized as general, savings and              at work (for which the employer is             or undergoes trauma that needs treatment.       develop and provide the highest quality         in customer services
                                    protection and health. They include              liable under the Saudi Labor Law).             As heart attacks, strokes or cancer generally   insurance service in the Kingdom by
                                    insurance protection against general             Most workmen›s compensation laws               prevent people from working, the employee’s     leveraging its access to global resources
                                            accidents, fires, robberies, financial   allow the worker the choice between            financial situation really becomes difficult    and the strength and security of two of the     not only at times of accidents or diseases,
                                             losses, construction engineering        accepting compensation under the law           with additional costs for treatment.            world’s leading financial groups.               but also upon retirement, or the education
                                              risks and air, sea and land            and instituting a civil action against the                                                       The company says customer focus is            needs for a family member, in addition
                                               transportation risks.                 employer for damages based upon the            Thus, among the key features                    the key to its success. Its philosophy is to    to caring for property including house,
                                                  Under          savings      and    latter›s negligence under common law.          distinguishing insurance coverage at            prioritize the interests and needs of clients   furniture and equipment. It also extends
                                                   protections, Allianz Saudi        The workmen’s compensation also offers         Allianz Saudi Fransi are:                       and offer value-added services and the          to the protection of commercial activities
                                                     Fransi offers several plans     optional extension of coverage to include      • Proper out-patient and in-patient             protection they deserve. Clients can draw       and business insolvency.
                                                         such as the Workman’s       employer’s liability, 24-hour coverage,          treatment                                     comfort from the fact that Allianz Saudi         The company’s extensive branch and
                                                            Compensation,            mortician’s fee and repatriation expenses.     • Access to several hospitals and clinics       Fransi is backed by two financial giants        service center network is another strength in
                                                                I n c o m e                                                         • Vast network of service providers             working together to provide the best and        customer services. The head office is located
                                                                   Protection        hEAlTh InsURAnCE                                 available throughout the Kingdom and          widest possible range of insurance services.    in Riyadh at the Al Safwa Commercial
                                                                      and Group      Allianz Saudi Fransi lays great emphasis         foreign countries                             The company’s policy of single point of         Building near Khaleej flyover and the
                                                                                     on health (medical) insurance. It covers       • Global coverage upon request                  contact has been welcomed by Saudi and          branch network includes an additional
                                                                                     against medical expenses incurred by the       • Expenses related to returning the body        international clients who appreciate the        office in Riyadh, two in Jeddah, Dammam,
                                                                                     employee for treatment of disease or illness     of deceased to homeland                       ease of business when they can consult          Khobar, Madinah and Hassa. Customer
                                                                                     at a wide network of hospitals or nursing      • Coverage of chronic diseases, with no         one source for risk management and              relations staff at all branches are trained to
                                                                                     home for any in-patient or outpatient            sub-limit                                     multiple insurance programs.                    provide technical and specialized support
                                                                                     procedures. Individual families can insure     • Alternatives for covering pregnancy             Allianz Saudi Fransi also takes care          to clients. The company has also employed
                                                                                     themselves and companies can insure their        and childbirth, as well as dental and         to tailor Shariah-compliant products            international mediators to provide advice
                                                                                     employees along with their dependants            ophthalmic treatment                          specifically needed in the Saudi market.        to clients from local companies. Allianz
                                                                                     under the medical insurance scheme.                                                            Its information and advisory services           Saudi Fransi’s partnership with Banque
                                                                                      There are several types of coverage,          CUsTOmER FOCUs                                  excel because they are shaped on the            Saudi Fransi enables the company to
                                                                                     such as treatment in outpatient clinics        Decentralization is the key characteristic      basis of a genuine understanding of each        provide insurance services from the bank’s
                                                                                     and hospitals, or treatment in hospitals       of Banque Saudi Fransi and the Allianz          client. For example, the company offers         60 branches in the Kingdom as well.
                                                                                     only, and treatment by use of the medical      Group. In every business and market in          a comprehensive package of Islamic
                                                                                     card at specific medical centers in            which the two companies operate, the            products that allows full care for families,

16   MUHARRAM 1430 | JANUARY 2009                                                                                                                                                                                            THE COOPERATIVE HEALTH INSURANCE                        17
                                                                                                                                                4. Risk Evaluation: Analysis of each risk                                                     Typically,     insurance      companies
                                                                                                                                                   to assess its full impact and fallout.                                                    manage the risks through agreements
                                                                                                                                                5. Decide whether current preventive or                                                      with financial institutions. For example,
                                                                                                                                                   planned measures, if any, are sufficient                                                  Tawuniya’s CEO Ali Al-Sobaihin said
                                                                                                                                                   to keep the risk under control at an                                                      in a recent statement to the media that
                                                                                                                                                   acceptable level, in a manner that                                                        his company has already entered into
                                                                                                                                                   meets the legal requirements.                                                             agreements with a number of local
                                                                                                                                                                                                                                             banks, enabling it to underwrite the risks
                                                                                                                                                Once the risk analysis is complete, the focus                                                associated with repayments of loans.
                                                                                                                                                turns to managing the risks. Risk management                                                 The agreements with banks will also
                                                                                                                                                typically follows three phases:                                                              help in issuing insurance policies and
                                                                                                                                                • Identifying the nature of risks that                                                       conducting econometric analysis of loss
                                                                                                                                                   may affect the property associated                                                        rates, facilitating auditing and control
                                                                                                                                                   with organizations: natural accidents,                                                    processes,     and providing statistical
                                                                                                                                                   neglect or mismanagement.                                                                 information. The banks will undertake
                                                                                                                                                • Risk assessment: Evaluation and                                                            marketing and sales to customers in all
                                                                                                                                                   determination of the seriousness and         subscribers based on the risk element in     regions of Saudi Arabia.
                                                                                                                                                   frequency of possible incidents.             the insured activity.                         Al Sobaihin also referred to the fact that
                                                                                                                                                • Controlling risk with emphasis                 In order to calculate the fees charged by   these alliances will allow banks’ clients
                                                                                                                                                   on prevention and reduction of risk          insurance companies from their clients,      access to all financial services at a
                                                                                                                                                   possibility to the lowest possible level.    individuals or companies, it is necessary    single point, including the conversion of
                                                                                                                                                                                                for insurance companies, as well as for      underwriting process and insurance risks
                                                                                                                                                RIsK And InsURAnCE                              clients, that insurance fees should be       to technically and financially qualified
                                                                                                                                                Insurance is based on the idea of               commensurate with the magnitude of           insurance company.

                                                                                                                                                cooperation and burden-sharing when             risk and probability of their occurrence.     The Cooperative Health Insurance
                                                                                                                                                risks occur so that the resulting loss is        Therefore, most insurance companies         Council is taking all care to avoid any
                                                                                                                                                not shouldered by an individual.                depend on quantitative calculations to       confusion at a stage when the Kingdom’s
                                                                                                                                                 Historically,     the    Arab      Muslim      estimate the volume of the insurance         insurance sector is evolving rapidly.

                                                           and insurance
                                                                                                                                                community resorted to the practice of
                                                                                                                                                insurance in one form or another, and
                                                                                                                                                the practice might have been primitive          Insurance is based on the idea of cooperation
                                                                                                                                                or sophisticated depending on the               and burden-sharing when risks occur so that the
                                                                                                                                                circumstances of time and place. In his
     Risk Management emerged as a specialized         Risk management is a systematic approach       prepare for unforeseen developments        Introduction to History (Al-Muqaddimah),
                                                                                                                                                                                                resulting loss is not shouldered by an individual
     approach to the management of industrial        to identifying the hazards, assessing and       and negative fallouts.                     Ibn Khaldoun mentions that Arabs
     projects in the early years of the 20th         evaluating the risks while simultaneously     • The preparation of contingency plans.      practiced property insurance of several         they cover, based on purely economic         The council gives all companies the
     century. Its main objective was to provide      working out appropriate solutions and         • Assess policies on a continuous basis      types. For example, during summer and           objectives, including accounts of profits    opportunity to adjust their status in a
     security for the workers engaged in projects,   methods to control damage. Organizations        and rearrange priorities according to      winter trips, it was agreed among convoy        and market share, taking into account        manner appropriate to market changes
     as well as securing the project’s property.     need to remain alert to danger signals from     changing needs of the organization.        members that certain compensation was           the levels and ranges of competition.        and outputs, granting them suitable
       Since then, the world has grappled            within that will enable them to evaluate      • Address legal requirements and safety      to be paid to any person whose camel            Calculations depend primarily on the         opportunity to fine-tune their positions,
     with the idea of managing risks by using        and undertake risk assessment on an             management issues                          dies during the journey. Each member            available information and historical         and reduce the volume of obstacles. As
     scientific methods. Risk management             ongoing basis. The typical warning signs                                                   used to pay a percentage of his profits         data, which constitute the basic inputs      the system requires the understanding
     may be described as a program to prevent        and some important measures taken by          A structured approach to risk management     or his capital during this specific journey     of assessment and insurance charges          and cooperation of several parties, it
     danger and reduce the volume of losses          organizations in response are:                will involve the following key operational   as his share of compensation. Also, they        collected by insurance companies.            would be suitable for the Council to
     when losing is unavoidable, and to study        • When threats of any kind become evident     steps:                                       used to agree on a compensation for the          These quantitative and calculative          prepare a Risk Evaluation Form, with
     the causes of each risk, in order to avoid      and it also becomes clear that existing       1. Advance planning and organization of      loss of business resulting from the deaths      models, and their standards, depend on       the cooperation of the companies and
     its repetition in the future.                   mechanisms are inadequate to tackle              risk assessment process.                  of their camels.                                corporate assumptions and objectives         other governmental bodies working in
       Before discussing risk administration,        those threats. When there are signs that      2. Classification of activities, and          Risk assessment in order to determine          of profitability and competitiveness         the field, because this form would also
     how to analyze risks, and the relationship      the planned or applied methods of threat         gathering information on them. (In the    insurance fees to be collected is               as determined according to insurance         specify the procedures to be undertaken
     between risk and insurance, it is necessary     control are not fulfilling their objectives      area of health insurance, all prevalent   considered to be one of the most                market circumstances and the volume          by the authorities when dangerous
     to differentiate “hazards” and “risks”. A       and are unsuitable for the assigned tasks,       and other diseases in the society         important and difficult processes linked to     of total demand for insurance policies.      incidents happen, God forbid!
     hazard is the source of a possible damage       misunderstood, or used by persons who are        should be included).                      the procedures undertaken by insurance          They also take into account several
     or injury. Risk, on the other hand, means the   misfits for the position or inefficient       3. Risks Distinction: Spotting all           companies. This process should take into        other variables such as quality,
     consequence of a dangerous or undesirable       • At the time of introducing radical             evident risks as related to each          consideration the amounts of money              durability and future conditions in the
     mishap (an event, accident or development).       changes, assess the impact and                 work activity.                            that insurance companies have to pay to         insurance market.

18       MUHARRAM 1430 | JANUARY 2009                                                                                                                                                                                                  THE COOPERATIVE HEALTH INSURANCE                    19
                                                                                                                                                                                                         hot Topic

     Health insurance and
                                                                                                        higher rates of job satisfaction among their
                                                                                                        employees, and a significant improvement
                                                                                                        in performance and productivity.
                                                                                                         We conducted a series of interviews
                                                                                                        to highlight the importance of health

     job satisfaction
                                                                                                        insurance and medical care for employees
                                                                                                        and their impact on the work environment
                                                                                                        and personnel management in Saudi

                                                                                                        gREAT BUT InsUFFICIEnT
                                    By Faisal Al-Shaya                                                  Mr. Motlaq Al Subaie, Production
                                                                                                        Director at the new Al-Ghaleya television
                                    There is an undeniable link between employee                        channel, believes that public and private
                                                                                                        organizations in the Kingdom have
                                    health and job satisfaction. Organizations that                     achieved significant progress in the field
                                    provide good healthcare protection to employees                     of employee health insurance, which is
                                    and their families are likely to gain from higher                   a sign of a positive shift in organizations’
                                                                                                        approach to caring for their staff.
                                    productivity.                                                       However, in general, public and private
                                                         Healthcare for employees and their family      sector organizations depend on free
                                                         members is a key factor in achieving job       health provided by the Ministry of Health
                                                         satisfaction and security. Besides having      for the citizens, and by some public sector
                                                         an impact on the performance level, it         organizations, such as the Ministry of
                                                         also helps foster work force loyalty to the    Defense and Aviation, the Ministry of the
                                                         employer and the organization. Developed       Interior and the National Guard.                                        sense of loyalty and belonging to their
                                                         countries are giving great importance to        Though these developments are                                          organizations. When organizations care
                                                         employee healthcare and have adopted           important, they are still insufficient to                               for their employees, the latter respond
                                                         strategies, programs and regulations to        meet the health needs of a large number                                 positively. Needless to say, loyalty is very
                                                         guarantee healthcare protection which is       of employees who lack proper health                                     important for organizations; studies have
                                                         the right of every employee and his or her     insurance. It is noticeable that public                                 shown that higher levels of staff loyalty
                                                         family. In developing countries, especially    hospitals face great pressures, resulting in                            means lower levels of absenteeism and
                                                         in the Arab world, there is only minimal       lengthy waiting period of several months to                             improved performance at work. The
                                                         interest in this important element of the      conduct medical operations, even though                                 provision of medical insurance helps in
                                                         work environment. In many instances            in some cases patients cannot afford to                                 grooming a healthy work force, directly
                                                         there is no healthcare system for workers;     wait. A large sector of employees cannot                                improving the level of productivity. Hence,
                                                         if any, the systems are weak and suffer        afford private sector health services,                                  organizations and institutions should
                                                         from several gaps enabling employers           leading to psychological and physical                                   develop strategies to extend adequate
                                                         to breach or reduce their obligations,         pressures stemming from their inability to                              healthcare to their employees and the
                                                         rendering employee healthcare in a totally     protect themselves and their families. The                              government departments concerned
                                                         unsatisfactory state.                          high cost of medical treatment has led to                               should issue necessary legislations to
                                                           However, the situation has begun to          a situation in which an increasing number                               ensure that employers provide appropriate
                                                         change over recent years, with new labor       of people who cannot afford hospital                                    levels of healthcare to staff.
                                                         regulations, and the adoption of modern        visits are forced to avoid doctors and                                     Motlaq emphasizes the need for
                                                         methods in the management of human             hospitals, except in emergency cases. This                              comprehensive healthcare which is not
                                                         resources. There is also an increasing         affects their health and their performance
                                                                                                                                                       Motlaq emphasizes the    limited to the curative, but includes the
                                                         awareness among workers about their            at work, which reflect on the productivity     need for comprehensive   preventive aspect, health education
                                                         rights and privileges.                         of organizations.                                                       and awareness, and campaigns against
                                                                                                                                                       healthcare which
                                                           In the Kingdom Saudi Arabia, private          Motlaq explains that adequate medical                                  harmful habits such as smoking that
                                                         sector institutions have been made             insurance is an important basis for employee   is not limited to the    should motivate staff to give up. In
                                                         responsible for providing medical care         satisfaction. Emphasis on improved health      curative, but includes   addition, employees should have access
                                                         to employees and their families. Recent        and keen interest in reducing occupational                              to healthcare consultation at work,
                                                         studies indicate that the companies and        accidents and diseases will lead to better     the preventive aspect,   and means to monitor and follow up
                                                         institutions that apply effective healthcare   protection for staff members from health       health education and     investigations related to occupational
                                                         programs for their workers, reported           risks, thus improving their morale and                                  diseases.

20   MUHARRAM 1430 | JANUARY 2009                                                                                                                                           THE COOPERATIVE HEALTH INSURANCE                   21
                                                                                                                                                                                                                                                                     hot Topic
                                                    health insurance is a key component            one of the administrators at the hospital, he   clinics and medical centers to discipline     the person’s medical problems. Another      for the company’s response for an hour.
                                                    of the modern work environment that            was examined by the doctor but he did not       themselves.                                   person using the card may expose the        In case we receive no reply during that
                                                    helps boost morale and productivity.           receive the same care as before. Alshaya          Dr. Al-Krounz says one problem is that      original holder of the card to all kinds    time, we consider this an approval. Some
                                                    Modern life has many advantages,               says the hospital probably concluded that       some cardholders consider their insurance     of risks including death, God forbid.       companies have reduced this waiting
                                                    but also a negative impact on public           he would not pay for the radiology and          cards as bank cards or credit cards and       That is why it is necessary for insurance   time to 15 or 30 minutes. Of course the
                                                    health stemming from factors such as           drugs if the doctor prescribed those, and       do not know their rights and duties. “We      companies to orient the insured, through    competition among domestic insurance
                                                    environmental pollution, psychological         of course the hospital would not bear that      have already asked insurance companies        orientation courses or pamphlets, so that   companies is largely to the benefit of the
                                                    pressures, the discovery and emergence         for him. Thus, the doctor told him that he      to orient their clients with the meaning of   the insured would know and understand       insurance cardholder.”
                                                    of new diseases. With technical and            was in good health and did not need any         insurance card, and how they can truly        his rights and dues. Unfortunately,           He also notes that the implementation
                                                    technological advancement, the world           X-ray or laboratory tests. Alshaya says this    benefit from them. We face problems           however, this does not happen.”             of compulsory health insurance has led
                                                    is also discovering previously unknown         experience has made him skeptical and           with some insurance cardholders, when          Commenting on the view that hospitals      to additional pressure on hospitals. Some
                                                    causes of death. The           increase in     driven him to conclude that insurance           they give their cards to some relative        are interested only in making profits       large hospitals used to receive up to 500
                                                    population growth and the steady growth        companies and hospitals are in collusion        or neighbor, believing that insurance is      and exploit patients by asking for          visitors per day before, while now they
                                                    in business, accompanied by the spread         against patients.                               already haram (religiously illegitimate),     unnecessary radiology and laboratory        welcome up to 1500 visitors, which is
                                                    of many organic and psychological                                                              so it is not a problem to manipulate          tests, Dr. Al-Krounz said such things       equivalent to three times the previous
                                                    diseases and diseases such as cancer,          TRUsT Is KEy                                    it. Such actions hurt the Kingdom, its        may have happened in the past, but not      record. As against 200 letters of approval
                                                    diabetes, cardiovascular problems has          Nora Shan, another bank employee,               hospitals, medical centers and insurance      anymore. With the implementation of         to insurance companies before, they now
       Abdullah Alshaya                             made it impossible for the State to provide    shares the same pessimistic perspective.        companies, in addition to causing to          health insurance, laws now favor the        send up to 600 letters, he concluded.
                                                    comprehensive medical insurance for all        She says that the mere provision of health      the patients themselves. As you know,         patients. “For example, when we send a
       stresses that it is                          citizens. Citizens are thus faced with         insurance for employees is not enough. It       each patient is assigned a file including     letter to the insurance company asking
       important to find                            long waiting periods if they depend on         is disturbing if there is health insurance      personal information, illness history, and    for an approval for a procedure, we wait
                                                    government services and high costs if          and one cannot find trustworthy hospitals.
       the right kind of                            they approach private hospitals. There         She says: “I was suffering from back pain,
       institutions that are                        is little doubt that when a worker or          and the medical diagnosis was that it was
       genuinely committed                          member of his family suffers an incurable      caused by a cartilage. I started visiting the
                                                    disease that requires costly healthcare, it    hospital for appropriate physical therapy
       to healthcare                                has a psychological impact leading to          to ease the pain, when I discovered that
                                                    productivity issues. The problem is more       different levels of treatments are offered
                                                    intense if the employer does not provide       to patients who are covered by their
       Motlaq works in a firm that tends            health insurance to staff.                     company and those who pay on their
     to classify staff members into several           According to the World Health                own. The treatment, the medicines and
     categories, such as gold, silver, and          Organization reports, drugs consume            even the waiting time are much better
     bronze.      Although Motlaq’s position        more than 50 percent of household health       with patients who pay simply because
     belongs to the silver category, the health     expenditures in developing countries.          hospitals try to exploit those patients
     insurance company made a mistake               The cost of medicines and healthcare           to fullest extent. In other words, those
     and gave him a bronze card, which              increases at an average rate of 8 to 12 per    who pay more get better services and,
     does not offer the same level of benefits      cent annually, which is higher than the        unfortunately our hospitals seek profit
     as silver and gold. After reviewing the        increase in the cost of consumables.           above all. Sbhan says she finally opted to
     matter with the hospital and learning            Alshaya stresses that it is important to     get treated in private hospitals outside the
     about the different levels of benefits, he     find the right kind of institutions that are   Kingdom at her own cost.
     asked his firm to seek compensation. The       genuinely committed to healthcare. He
     insurance company sent him an apology          recounted his own experience with a            ImPORTAnCE OF AwAREnEss
     letter enclosing a silver card. Of course,     hospital and an insurance company. Two         However, hospitals say this is not the
     Motlaq is grateful to Allah that he has not    days prior to his medical appointment          case anymore. Asked if hospitals granted
     had to use the benefits of the card so far,    with a doctor, the hospital registration       preferential treatment to cash patients as
     and prays to be always endowed with            office called Alshaya to notify him that the   against insured patients, Dr. Samir Youssef
     the best of health and wellness. He says       physician would not be available at the        Al-Krounz, Director of Credit Demands
     that disease is tiresome in itself, but the    assigned time, and that his appointment        at the Specialized Medical Center, says:
     insurance companies and hospitals make         is postponed for two days. Upon his            “Maybe that was the case before. The
     it even worse!                                 arrival at the reception on the specified      situation is different now, since 95 percent
                                                    date, Alshaya was shocked when the             of hospital visitors carry insurance cards.
     sECURITy BEFORE InsURAnCE                      receptionist told him that his insurance       The uninsured who pay their own bills
     It is said that man does not live with bread   validity had expired the day before, and       are only 5 percent”. He notes that the
     alone. . Abdullah Alshaya, an employee         that he would have to cover the cost of        implementation of strict laws in the
     of the Arab National Bank, agrees that         examination. After arguing his case with       Kingdom has forced careless hospitals,

22       SHAWWAL 1429 | OCTOBER 2008
         MUHARRAM 1430 | JANUARY 2009                                                                                                                                                                                                  THE COOPERATIVE HEALTH INSURANCE                   23
                                                                                                                                                                      social Responsibility
                                                                     Corporate Social Responsibility (CSR)

     The CsR
                                                                     is firmly entrenched in the business
                                                                     culture and conscience of our times. It
                                                                     is entwined with sustainability, corporate
                                                                     ethics, responsible investing, community
                                                                     investment, social auditing and good

                                                                     corporate citizenship – terms that we
                                                                     regularly come across in media reports,
                                                                     from speeches. Whos organizations are
                                                                     also keen advertise of CSR.
                                                                     CSR may mean different things to different
                                                                     people, depending on what branch of
                                                                     management and which side of the
                                                                     political spectrum he or she sits on. A CEO
     Corporate Social Responsibility has gained new respectability   and his strategist would want to consider
     in recent years in board rooms and among senior executives.     the strategic value that CSR brings to the
                                                                     business. A public relations practitioner
     It has become an important gauge of a company’s                 would want to use CSR to strengthen
     commitment to remain ethical and responsible. In this           corporate reputation by communicating

     feature, K. Krishnakumar looks at the meaning of CSR and                                                                                                     to a “triple bottom-line” definition
                                                                     What becomes clear from these definitions is that
     emerging trends.                                                                                                                                             which seeks to lay equal emphasis on
                                                                     CSR happens when companies go beyond their                                                   the environment, social and financial
                                                                                                                                                                  impact of a company’s activities.
                                                                     commitment to their primary stakeholders – such as                                           CSR has also been defined as the way
                                                                     shareholders and employees – and do good for the                                             “companies manage the business
                                                                     community at large                                                                           processes to produce an overall positive
                                                                                                                                                                  impact on society” and as “the continuing
                                                                                                                   to strategizing social responsibility          commitment by business to behave
                                                                     the     company’s     commitment         to   and reporting achievements on a                ethically and contribute to economic
                                                                     sustainability and community programs.        regular basis, with some experts even          development while improving the
                                                                     And then there are those who support          suggesting that CSR is the next big thing      quality of life of the workforce and their
                                                                     the late US economist Milton Friedman’s       in corporate management.                       families as well as the local community
                                                                     assertion that a company is responsible                                                      and society at large”.
                                                                     only to its shareholders and employees,       dEFInITIOns                                    What becomes clear from these
                                                                     and its only purpose is to increase           So what exactly is CSR? The concept has        definitions is that CSR happens when
                                                                     shareholder returns.                          defied a universally accepted definition.      companies go beyond their commitment
                                                                     The history of both CSR and corporate         Pundits and business leaders have sought       to their primary stakeholders – such as
                                                                     greed is as old as business itself. This is   to widen its scope. One of the simplest and    shareholders and employees – and do
                                                                     because the idea of both social benefit       most comprehensible definitions comes          good for the community at large. At
                                                                     and profit are inherent in the concept of     from the European Commission, which            the same time, it has to be much more
                                                                     doing business. Human history has no          says CSR is “a concept whereby companies       than some charitable donations and
                                                                     dearth of chapters on power and greed         decide voluntarily to contribute to a better   sponsorship of community events.
                                                                     associated with business and profit on the    society and a cleaner environment”.
                                                                     one hand, and on capitalist benevolence       There are many in the industry who             BEnEFITs TO BUsInEss
                                                                     and philanthropy on the other.                believe that “sustainability” must be          How can companies benefit if they have
                                                                     The term CSR was apparently coined in         the core of CSR definition and practice.       to invest significant amounts of money
                                                                     the US in 1940s or 50s, but the global        Former Norwegian Prime Minister Gro            in CSR programs? An article in a recent
                                                                     debate on CSR and business thinking           Harlem Brundtland, currently special           issue of the “Leader to Leader” magazine
                                                                     has evolved tremendously since then,          envoy to UN on climate change, defines         cites the 1942 book The Industrial Man
                                                                     and since Friedman wrote in 1970 that         sustainability as “meeting the needs of        by American thinker, education and
                                                                     “the social responsibility of business is     the present without compromising the           management expert Peter Drucker who
                                                                     to increase its profits”. The question        ability of future generations to meet          asserted that investing in social assets is
                                                                     is no more whether companies should           theirs.” While that rings true for the         at the heart of creating customers. Says
                                                                     have CSR programs; the focus has shifted      world’s ecology, businesses relate more        the article: “Without a customer today,

24     MUHARRAM 1430 | JANUARY 2009                                                                                                                        THE COOPERATIVE HEALTH INSURANCE                     25
                                                                                                                                                                                                                                              guest Article
                                                                                                    external objectives and connection with
                                                                                                    financial performance)

                                                                                                                                                  Brace for the most difficult phase
                                                                                                    2) Find better measures (example:
                                                                                                    Unilever’s tie-up with Oxfam to study
                                                                                                    the impact of its operations in reducing
                                                                                                    poverty in Indonesia)
                                                                                                    3) Ensure credibility through statistics
                                                                                                    and transparency                                                         The Arabic language is prolific with a fabulous vocabulary. This includes synonyms and
                                                                                                    4) Recognize the limitations of the                                     antonyms that are used vastly in our everyday life. Examples of synonyms are: haste and
                                                                                                    measures (acknowledge that it may not                                   speed; deliberate and slow. However, haste and speed are antonyms to deliberateness
                                                                                                    be possible to exactly measure the ROI                                  and slow respectively.
                                                                                                    on CSR, and explain the achievements                                     Presumably, contradiction is a contrast in the meaning. Haste is the opposite of
                                                                                                    and setbacks in context).                                               deliberate; speed is the opposite of slow. While speed and deliberate are commendable,
                                                                                                    Leading companies in every sector all                                   haste and slow are abominable. “Haste makes waste; being deliberate brings about
     the enterprise has no purpose. Without         glOBAl TREnds                                   over the world have now embraced                                        safety”, goes the saying. What inspired me to use this linguistic tie-in for a subject
     a customer tomorrow, the enterprise has        There are plenty of examples of great CSR       CSR, but Europe has led the way in                                      that addresses the health insurance is the speed -- naturally commendable -- of the
     no longevity or sustainability. Without        programs that have resulted in significant      integrating social responsibility with the                              Cooperative Health Insurance Council in implementing the rules of cooperative health
     a society or community, there is no            community achievements, whether directly        core business activity of an organization.                              insurance. The application of the first phase started in the middle of 2006, bringing all
     enterprise. Investment in social assets        related to the business of a company or         The European model is thus considered                                   enterprises having 500 workers or more under the insurance law. The process continued
     is a common requirement to all three           purely related to larger development goals.     more sustainable compared to the                                        uninterrupted until the implementation of the fourth phase from 7/4/2008, bringing
     realities”.                                    The genesis of at least some of those may       philanthropic and charitable route. It                                  enterprises having 50-98 workers under the law.
     That may sound like grand philosophy for       be traced to the tainted history of certain     is often asked whether governments                                       These four phases included companies and establishments operating in all sectors
     the life time of a business, but in practice   industries and companies, initially thought     can play an effective role on promoting                                 in the Kingdom. These phases have been implemented without many difficulties or
     there are powerful indicators that primary     up as responses to mounting pressure            CSR. In the UK, CSR is among the many         Mohammed A. Al            impediments. It was relatively easy to deal with companies and establishments because
     stakeholders in a company – customers,         from NGOs, media, communities and               portfolios managed by the Department          Shayae, Insurance         they are most often profitable enterprises who are used to fulfilling their commitments.
     staff and shareholders – would be happy        governments.                                    for Business, Enterprise and Regulatory                                 Also, insurance companies did not encounter major problems in dealing with such
     and proud to be associated with socially       Measurement and reporting are two key           Reform. The EU actively promotes the          Control Manager at        entities and embarked on a rigorous competition to get their share of the pie.
     responsible companies.                         industry trends that will help businesses to    concept and sets policy and practice          Saudi Arabian Monetary     The next phase, i.e. the individual sponsorship phase, is said to be the most difficult and
     Research has shown that consumers              assess the true value of their CSR programs     guidelines for businesses.                                              intricate one. It applies to domestic helps and chauffeurs. Individual sponsorship implies
     are generally prepared to pay more             and ensure that the concept is not reduced
                                                                                                                                                  Agency (SAMA), has a      that the sponsor endures the insurance expenses for his small number of workers (a maid
     for socially and environmentally               to PR talk.       Corporate managements         CsR In sAUdI                                  word of caution about     or driver, or both) while the risks associated with their insurance is not clear. Insurance
     responsible       products     made       by   need to make a conscious effort to resist       Philanthropy and the spirit of charitable     the next phase of the     in such cases is not economically feasible, which prompts insurance companies to
     companies that are perceived to be             the temptation to take advantage of the         giving run deep roots in the Kingdom, but                               quote high prices for their policies. In short, the application of compulsory health
     socially responsible. A MORI poll of           popularity of CSR by resorting to superficial   there appear to be few businesses that        new health insurance      insurance system on individual sponsorships segment shall be totally different from
     12,000 consumers across 12 European            gloss, and stakeholders including the           have made CSR programs and reporting          regime that will extend   earlier phases. There are bound to be more complaints from individual sponsors of
     countries in year 2000 found that              media need to look more deeply into the         an integral part of their strategy.                                     insurance policies against the Health Insurance Council, insurance companies,
     a company’s commitment to social               responsibility claims of businesses.            A notable exception is Saudi Aramco which     coverage to workers       and the Saudi Arabian Monetary Agency. The most important issues expected
     responsibility was an important factor         However, measurement of CSR is not              has a history and tradition of CSR dating     under individual          to come up during this phase include likely requests to delay inclusion
     in the buying decisions of a large             easy. Writing in the Ethical Corporation        back to its early years. SABIC (Saudi Basic                             of insurance in the passports system, complaints about the high cost of
     majority. Seventy-one percent of the           nearly two years ago, London Business           Industries Corporation) has taken to CSR
                                                                                                                                                  sponsorship, including    insurance and the lack of adequate health services.
     surveyed believed that “commerce and           School professor Sir Andrew Likierman           more recently while in the private sector,    domestic helps and         Nevertheless, although I have full confidence and trust in the
     industry do not pay enough attention           noted the lack of a unified framework           Abdul Latif Jameel has several ongoing        drivers.                  officials of the Health Insurance Council, the phase of individual
     to their social responsibilities.”             to determine what social responsibility         community development programs.                                         sponsorships requires extreme caution. The rapid success seen in
     Studies in the United Kingdom indicate         means. “Many organizations include the          Saudi Arabia’s first CSR Forum, to                                      the implementation of the previous phases must be matched in
     that companies with a reputation for           way they treat customers and employees          be held in Riyadh in May 2009 with                                      this phase with added patience and foresight.
     social responsibility would find it easier     as part of the social responsibility agenda.    the support of the United Nations
     to attract and retain quality human            With no agreed definition of social             Development Program (UNDP), is an
     resources.      Considering the general        responsibility, that is rarely challenged,      opportunity for local businesses to share
     momentum around the world towards              but the question here is what makes staff       their experiences and learn more about
     goals associated with social responsibility    and customers so special.”                      effective ways of communicating their
     and ethics, it seems fair to assume that                                                       responsibility programs to stakeholders,
     ordinary shareholders who have hitherto        He recommends a four-stage process to           including the wider public.
     focused only on return on investments          tackle the challenges of measurement:
     may also begin to weigh-in ethical factors     1) Clarify the measurement framework
     before investing in a company.                 (definition, assessment of internal and

26       MUHARRAM 1430 | JANUARY 2009                                                                                                                                                                               THE COOPERATIVE HEALTH INSURANCE                       27
                                                                                                                                                                                                                         Cover story

     The Kingdom’s war against smoking
     Five-year national plan begins to yield results;                                               ministry of health determined to nail
     tobacco company agents in court                                                                  The Ministry of Health has realized that          This plan aims to actively promote         of protecting non-smokers. It advocates
                                                                                                      most of its resources and efforts are spent     national anti-smoking efforts to enlighten   a ban on cigarette advertisements in
                                                                                                      on curing the effects of smoking. It also       people about the ill effects of smoking      all mass media as well as trans-border
                                     By Mustafa Shihab                                                realizes that its efforts to check the spread   through awareness campaigns. The             advertisements, such as those on television
                                                                                                      of smoking have gone down the drain as          plan is designed to try and prevent non-     satellite channels. It urges imposition
                                     In many countries, officials who are in charge of                is evident from the widespread smoking          smokers from falling into the tobacco        of special anti-tobacco tax policies and
                                       leading the campaign against smoking try to establish          habit among the youth and adolescents.          trap. It aims to reduce the use of tobacco   stresses the need to support NGOs’ anti-
                                                                                                      It was discovered that 50 percent of            in the society, encourage people to quit     smoking efforts.
                                       a connection between the harmful habit and the                 the Ministry’s budget was spent on the          smoking, build capacity to fight the           Implementation of this plan is progressing
                                         insurance system, hoping that it will help their cause.      medical care provided for those negatively      smoking habit and establish a system         on two parallel lines: activating the anti-
                                           The same situation holds true in Saudi Arabia, which       affected by smoking and on fighting its         for observation, research and oversight.     smoking program issued in 1423 H, and
                                                                                                      detrimental effects. This is what prompted      The plan calls for new legislation to curb   launching litigation against the tobacco
                                            has introduced a new and compulsory health                the Ministry to launch a five-year national     smoking in the kingdom, activating the       company agents who sell the products in
                                             insurance system. Anti-smoking campaigners               plan (2008-12) to fight the tobacco habit.      existing legislations and finding ways       the Kingdom.
                                               want to find a mechanism that correlates the                                                                                                          In this report, the Cooperative Health
                                                                                                                                                                                                   Insurance magazine takes stock of the
                                                  value of an insurance policy with the status                                                                                                     anti-smoking efforts of the Ministry of
                                                    of the insured as a smoker or non-smoker.                                                                                                      Health. Abdullah Al-Baddah, General
                                                      However, the Ministry of Health in Saudi                                                                                                     Supervisor of the Anti-Smoking Program
                                                         Arabia has taken its war against smoking                                                                                                  at the Ministry of Health, and Ibrahim
                                                                                                                                                                                                   Al-Musaytir, General Manger of the
                                                         right up to the country’s judiciary.                                                                                                      Legal Department who is in charge of the
                                                                                                                                                                                                   litigation process, shed light on the nature
                                                                                                                                                                                                   of the program, its mission and means as
                                                                                                                                                                                                   well as the details of the lawsuit and its
                                                                                                                                                                                                     Al-Baddah traced the beginning of the
                                                                                                                                                                                                   Ministry’s anti-smoking program.          “His
                                                                                                                                                                                                   Excellency the Minister of Health approved
                                                                                                                                                                                                   the program on 23/2/1423 H (6/5/2002).
                                                                                                                                                                                                   To achieve its goals, the program should
                                                                                                                                                                                                   be implemented in a systematic manner.
                                                                                                                                                                                                   The program covers both preventive and
                                                                                                                                                                                                   remedial aspects. It targets establishing fully
                                                                                                                                                                                                   equipped medical clinics; preparing both
                                                                                                                                                                                                   the administrative and medical program
                                                                                                                                                                                                   staff; conducting surveys, research and field
                                                                                                                                                                                                   studies; printing leaflets that educate and
                                                                                                                                                                                                   enlighten; issuing a special magazine about
                                                                                                                                                                                                   the program as well as regular newsletters
                                                                                                                                                                                                   alerting people to the harmful effects of
                                                                                                                                                                                                   smoking; launching regular awareness-
                                                                                                                                                                                                   raising campaigns and intensifying such
                                                                                                                                                                                                   efforts on important occasions such as the

28    SHAWWAL 1429 | OCTOBER 2008
      MUHARRAM 1430 | JANUARY 2009                                                                                                                                                           THE COOPERATIVE HEALTH INSURANCE                        29
                                                                                                                                                                                                                                                           Cover story
                                                                                                    • hold symposia, conferences and                  through passing and implementing                                                female. The study covered three age
                                                                                                      workshops;                                      regulations banning tobacco sales                                               groups: 15-19, 20-29 and 30-49. Riyadh
                                                                                                    • equip the staff in education and                to this age group and by launching                                              and Jeddah had the highest percentage of
                                                                                                      health sectors with the necessary skills        intensive health education programs at                                          smokers among all cites of the Kingdom
                                                                                                      and information that will help the fight        schools.                                                                        while Medinah and the Eastern Province
                                                                                                      against smoking;                            •   Help smokers to quit smoking for good                                           had the lowest (17percent). A vast majority
                                                                                                    • establish a statistical database based      -   launch intensive awareness campaigns                                            -- 97 percent -- used cigarettes and 82.7
                                                                                                      on studies and references that will             about the harmful effects of smoking                                            percent smoked filter cigarettes; 11.6
                                                                                                      help in the campaign; effective use of      -   provide medical treatment                                                       percent of the 1,473 smokers who took part
                                                                                                      the program website;                        -   encourage quitters to persevere                                                 in the survey smoked shisha. In 2006, 36
                                                                                                    • support the anti-smoking clinics in         -   conduct relevant studies and statistics                                         percent of them tried to quit smoking and
                                                                                                      the Kingdom; develop relevant               •   Protect non-smokers and the                                                     failed while 64 percent never tried to kick
                                                                                                      medical treatment programs;                     community at large from passive                                                 the habit. Amidst the 5,345 non-smokers
                                                                                                    • coordinate with anti-smoking bodies             smoking                                                                         who participated in the survey, 65 persons
                                                                                                      within and outside the Kingdom;                                                                                                 were smokers earlier who had managed
                                                                                                    • provide access to specialists in relevant   AChIEVEmEnTs                                                                        to quit. A study in 2007 found that 73.4
                                                                                                      fields (psychiatry, sociology,              “The achievement is great”, Al-Baddah                                               percent of the adolescents between 13-15
                                                                                                      psychology, health awareness)               stated in response to a question about the                                          years of age believed that smoking should
                                                                                                    • prepare an annual report about              program goals achieved so far. “The society                                         be banned at public places, 60.8 percent of
                                                                                                      the activities and accomplishments          is now more aware of the smoking blight.
                                                                                                                                                                                                   Al-Baddah cited recently           them believed that passive smoking affects
                                                                                                      of the Ministry of Health Anti-smoking      In the past, poets and artists used to project   compiled statistics for 2006       their lives and harms them. These surveys
                                                                                                      Program.                                    smoking as fashionable; men would smoke          and 2007 to assert that            appear to indicate that the government’s
                                                                                                                                                  in the presence of their wife and children,      the campaign has had a             anti-smoking program is having a positive
                                                                                                    PROgRAm sTRATEgIEs                            and none dared to interfere; women did                                              e impact on the society.
                                                                                                    Asked about the program strategies that       not consider non-smoking a pre-requisite
                                                                                                                                                                                                   remarkable impact on the            Al-Baddah noted that no reliable study
                                                                                                    have been adopted, Al-Baddah listed four      in their suitors. However, now so much has       society                            had been undertaken yet to determine
                                                                                                    key pillars that contribute to its success.   changed thanks to our awareness campaign.                                           the actual number of people exposed to
                                                                                                    • Qualify the staff needed to fight smoking   The best indicator of our success is the                                            passive smoking. It is assumed that up to
                                                                                                                                                  decline in the number of smokers. The new
     World No Tobacco Day, Hajj pilgrimage                                                                                                        regulations and rules banning all types of
     season, Ramadan, Gulf No Tobacco Week,
                                                    The society is now more aware of the smoking                                                  tobacco advertising and promotion in all
     and the entire summer season.”                 blight. In the past, poets and artists used to project                                        the media have helped.

     VIsIOn And mIssIOn
                                                    smoking as fashionable; men would smoke in the                                                  “The Kingdom also ratified the anti-
                                                                                                                                                  smoking framework agreement. The
     Al-Baddah stressed that the program            presence of their wife and children                                                           National Anti-smoking Committee was
     has a clear vision and mission. On the                                                                                                       formed by King Abdullah bin Abdul Aziz,
     one hand, the vision is to make smoking          Elaborating the goals and mission of the      - Hold training programs, workshops,          the Custodian of the Two Holy Mosques,
     socially unacceptable and to let everyone      program, Al-Baddah said it seeks to protect       and frequent short seminars for the         out of his keenness on making Makah and
     realise that it gravely jeopardises not only   community members from the harmful                anti-smoking program staff, whether         Medina non-tobacco cities. In addition, a
     the lives of smokers but also those around     effects of smoking, especially the youth.         from within or outside the Ministry of      great number of clinics are available to help
     them and the community at large. It is         It helps smokers to quit while protecting         Health                                      smokers quit. It should be noted though that
     also part of the vision to mobilize public     non-smokers from the harms of secondary         - Organize medium- and long-term              stamping out the smoking habits the whole
     opinion against tobacco promoters. The         smoke, especially children. It will intensify     courses for granting anti-smoking           society’s responsibility. If we act together,
     program’s mission stems from its status        research and training to enable the fight         program staff members an academic           we can protect our children and youth
     as a governmental program that suggests        against smoking. The mission of the               qualification in the field of fighting      from this killer habit. We look forward to
     anti-smoking methods, policies, and            program may be summed up as follows:              tobacco                                     the day when the Kingdom becomes totally
     procedures. It organizes preventive and        • implement social and awareness-               - Ensure good media coverage (print,          free from any form of smoking.”
     remedial activities meant to curtail the           raising health programs that target           radio and television)                         Al-Baddah cited recently compiled
     smoking habit among all sections of                curtailing tobacco intake and help          - conduct studies and compile relevant        statistics for 2006 and 2007 to assert
     the society by using the new means of              quit smoking;                                 statistics                                  that the campaign has had a remarkable
     reaching out, in coordination with the         • conduct studies, research and                 • Curtail tobacco intake by young             impact on the society. According to a
     bodies concerned. Ultimately, the program          surveys that help control the spread          people                                      study, in 2006, 21-23 percent of smokers
     aims at developing a healthy society by            of smoking in society and investigate         The targeted age group is that from         in the Saudi society are in the age group
     relying on the most qualified staff within         the health, economic, and social              kindergarten to secondary schools, i.e.     of 15-19, and in this age group 36 percent
     and outside Saudi Arabia.                          aspects of the problem;                       those below 18. This can be achieved        of the smokers were male and 6 percent

30       MUHARRAM 1430 | JANUARY 2009                                                                                                                                                                                             THE COOPERATIVE HEALTH INSURANCE                  31
     70 percent of community members are               of tobacco companies whose products are
     exposed to passive because the regulations        being marketed in the kingdom; however,
     banning smoking at public and work places         the door is still open for adding others
     are not implemented in Saudi Arabia unlike        of this sector when investigations about
     in some European countries where violators        them are completed. The lawsuit is based
     are fined up to $5,000.                           on the role of such agents in selling and
                                                       promoting tobacco products and the
     TAxEs And PRICIng                                 consequent damages. Such damages entail
     Discussing the possibility of raising the price   indemnifying the Ministry for the expenses
     of tobacco through taxation as a possible         incurred on the treatment of smokers. The
     solution, Al-Baddah noted that some               indemnification demanded amounts to
     European and North American countries             SR 127 billion (about $34 billion), which
     have managed to curtail the spread of             represents 50 percent of the total budget
     smoking in society, especially among the          of the Ministry of Health during the past
     youth and adolescents by increasing taxes.        20 years.”
     The program has managed to convince                 Al-Musaytir said that the Ministry went
     the relevant authorities about the need           to the court only after negotiations              Al-Musaytir said that the
     to increase tobacco taxes from 30 to 100          with tobacco companies failed. One of             Ministry went to the court
     percent, and it is hoped that the increase        the companies proposed that tobacco               only after negotiations with
     can even reach up to 150 percent. Tobacco         companies pay SR 180 million annually,
     companies strive to prevent any increase          but that would only be a small portion of the
                                                                                                         tobacco companies failed
     in their product prices to make it easier for     expenses endured. The Ministry rejected
     them to target the youth. Unfortunately,          the proposal and there was no agreement.
     studies indicate that 100,000 people,             Al-Musaytir noted that individuals can also     procedures and this lawsuit has top
     mostly young, fall prey to the habit every        sue such companies for the harms caused,        priority within the anti-smoking program.
     day. Hence, a law must be enacted to              but that will happen only when there is a
     compel tobacco companies to raise the             health culture in which people are aware        hIghER PREmIUm FOR smOKERs
     prices of their products. Hopefully it will       of their rights related to good health.         Commenting on the connection between
     help control this poison which destroys             Asked how this case is likely to move         smoking and medical insurance, Al-Musaytir
     individuals and families.                         forward, Al-Musaytir said: “We expect the       emphasised that the Council of Cooperative
       Al-Baddah said that smokers must be             agents to try and sidetrack the main issue      Health Insurance is fully aware that smoking
     charged higher insurance premiums as              and divert the course of the lawsuit to some    is a major cause of serious diseases, and that
     studies reveal that smokers are more              irrelevant issues. Some journalists have        a smoker is more susceptible to diseases.
     susceptible to diseases than others. They also    already raised this concern. However,           Hence, the suggestion that it would be fair to
     visit clinics and hospitals more frequently.      we are not going to get into this. In           differentiate between the policy premiums
     It will also help control the habit and           general, these companies do not have            paid by smokers and non-smokers. Since the
     encourage smokers to quit. Some health            anything to refute our case as the grave        medical insurance system in the Kingdom
     insurance companies in some countries             consequences of smoking are indisputable        is basically a cooperative one, it would be
     have already adopted this approach.               and acknowledged by even the countries          unfair to let some endure the repercussions
                                                       where tobacco is planted and grown. It is       of others’ smoking. Al-Musaytir said that
     lITIgATIOn                                        noteworthy here that most of the companies      higher premiums may act as an incentive
     Ibrahim Al-Musaytir, General Manger               that have been sued did not attend the          even for companies to give preference to
     of the Legal Department, spoke about              court sessions, and that we will not accept     non-smokers while hiring staff. It may also
     the Ministry’s efforts to curb smoking by         a compromise. Our goal is to curtail the        be an incentive for smokers themselves
     suing the tobacco company agents in the           smoking habit, and this is what we hope         to quit smoking so as to get the jobs they
     Kingdom. He stated that the idea took             the lawsuit can help us achieve. We have        seek. Conversely, non-smokers may be
     shape at the beginning of 2007 because            not only demanded indemnification but           offered discounts on insurance premiums,
     of the sharp rise in the consumption and          also measures to ban these companies            especially for those who quit.
     trading of tobacco. A lawsuit was filed at        from selling tobacco to children and at           Responding to a question, Al-Musaytir
     Riyadh General Court, and it has been             certain places.                                 said the Ministry could only sue tobacco
     already accepted. Three sessions have               Al-Musaytir declared that the lawsuit is      company agents in the Kingdom and
     been held to date and the fourth is due           not based on any particular legislation         could not sue the producing companies
     on February 14. “We are still waiting for         apart from the fatwa (Islamic legal ruling)     in the United States as the American
     companies’ response to the demands of the         that smoking is haram (forbidden). The          Judiciary does not accept lawsuits filed
     Ministry. Initially, we have sued 13 agents       Ministry is pursuing other more strict          from outside the country.

32        MUHARRAM 1430 | JANUARY 2009                                                                                                                  THE COOPERATIVE HEALTH INSURANCE   33

                           sanad offers multiple insurance policies to
                           support diverse needs of clients
                                                                            In the wake of the Kingdom’s decision        medication, dental fillings (composites   all included in the company’s dental
                                                                            to open and regulate the sector, a num-      and amalgams), root canal treatment,      benefits program. Besides, Sanad of-
                                                                            ber of insurance companies have se-          tooth extraction both simple and sur-     fers policy holders special discounts
                                                                            cured the license and established their      gical, X-ray (simple and panorama),       for other services not included in the
                                                                            business, effectively competing to gain      cleaning and whitening services are       dental benefits.
                                                                            a share of the growing Saudi market.
                                                                            Sanad Cooperative Insurance and Rein-        The company says its strategy and programs are built
                                                                            surance is a joint stock company which
                                                                            has emerged as a key player in the in-       around the strength of the word “Sanad”, and it will
                                                                            dustry, offering integrated insurance        strive to live up to its name
                                                                            products of various types to cater to the
                                                                            diverse needs of the market.
                                                                              Sanad is an Arabic word that signifies
                                                                            a binding contract protecting the rights
                          The concept of health insurance was               of consenting parties. It also means sup-
                          born out of the need to offer health care         port, help and collectivity. The company
                                                                            says its strategy and programs are built
                          to individuals and societies in the face of       around the strength of the word “Sanad”,
                          increasing medical costs, and naturally,          and it will strive to live up to its name.
                                                                              Sanad’s offerings include insurance
                          it acquires more importance in times              policies covering health, motor, prop-
                          of economic hardships. More than 150              erty, engineering and marine transporta-
                          countries have adopted health insurance           tion. The company will also soon have
                                                                            approval for the issuance of insurance
                          systems as it became increasingly difficult to    policies against liabilities and general
                          offer free medical treatment. Primarily, health   accidents. As for property insurance,
                                                                            Sanad’s policies protect the consumer
                          insurance provides a mechanism for people         against fire and robbery while offering
                          to ensure access to limited health services       comprehensive insurance on houses
                          through cooperation between the various           and valuable belongings, in addition to
                                                                            multi-risk insurance for offices.
                          players involved in the process.
                                                                            EyE And dEnTAl
                                                                            Sanad’s health insurance includes
                                                                            all ophthalmic services such as eye
                                                                            check-up, use of optical eyewear in-
                                                                            cluding prescription lenses and frames.
                                                                            For dental, the company offers several
                                                                            levels of care through a wide range of
                                                                            service providers. Medical consulta-
                                                                            tion, gum treatment including special

34   MUHARRAM 1430 | JANUARY 2009                                                                                                                            THE COOPERATIVE HEALTH INSURANCE               35
                                                                                           and spare parts, according to the conditions     and its contents, covering the loss of        policies. The Specific Cargo Insurance         Sanad’s Money Insurance Policy is another
                                                                                           and exceptions explained in the policy.          property due to fire, lightning, burglary     Policy protects each shipment, sent by       interesting offer under which the insurer is
                                                                                           Sanad also provides Third Party Insurance        or theft, explosion, earthquakes, storms,     sea or air, from any one place to another,   protected against loss of money by robbery,
                                                                                           Policy, which is compulsory by law as            floods and such hazards.                      against various risks. The Open Cargo        theft or other unexpected causes while in
                                                                                           stipulated in the Cooperative Insurance                                                        Policy affords automatic and continuous      transit between the insured’s premises and
                                                                                           Companies Law. This policy provides              Engineering insurance is another category     protection to all of the insured’s import    the bank or post office, or other specified
                                                                                           coverage for amounts that the owner of the       of products offered by Sanad with the         and export cargo shipments, sent by any      places. The policy also covers loss by
                                                                                           motor vehicle, or the driver, may be legally     following policies:                           means of transport, on pre- agreed terms.    burglary or house breaks-in whilst money
                                                                                           liable for in respect of:                        • Contractors All Risks Insurance             The Inland Transit Insurance Policy offers   is retained at insured’s premises in a safe
                                                                                           • Death of or physical injury to any             • Erection All Risks Insurance                protection for cargo transported from one    or strong room.
                                                                                              person including all passengers in the        • Machinery Breakdown Insurance               place to another by land.                      The Fidelity Guarantee Insurance Policy
                                                                                              vehicles (except the insured, his             • Contractor’s Plant & Machinery                                                           covers loss of money or goods belonging
                                                                                              spouse or the driver).                          Insurance                                   ACCIdEnT InsURAnCE                           to the insured against a direct pecuniary
                                                                                           • Property damage (except those                  • Electronic Equipment Insurance              Sanad also provides several accident-        loss caused by acts of fraud and dishonesty
                                                                                              owned by the insured or the driver at                                                       related insurance products, including        committed by employees.
                                                                                              the time of accident or property that         lIABIlITy InsURAnCE                           a personal accident policy. It covers          Yet another policy, titled Plate Glass
                                                                                              has been entrusted to the insured or          Liability policy indemnifies the insured      any accident the insured encounters as       Insurance, covers the cost of accidental
                                                                                              is in his custody or control).                against claims filed against him during       a result of violence, external and non-      and unintentional breakage of glass
     PREgnAnCy And ChIldBIRTh                                                                                                               the insurance term, because of injury or      visible act anywhere, causing the death      through any cause except the exclusions
     “Sanad babies are worthy of the highest
                                                “Sanad babies are worthy of the highest levels of                                           damage caused by a product the insured        or total or partial disability, within the   specified in the policy.
     levels of medical care, from the moment    medical care, from the moment they are conceived                                            has manufactured or sold. This policy also    geographic area specified in the insurance     With its diverse product portfolio,
                                                                                                                                                                                                                                       Sanad is bound to achieve rapid growth
     they are conceived till they are born,”    till they are born”                                                                         insures the liability of the employer under   policy. Sanad’s Travel Insurance Policy is
                                                                                                                                                                                                                                       in the Saudi market. The company is
     says the program benefits listed by                                                                                                    law towards his employee’s personal           designed to compensate passengers for
     the company. The program covers            Sanad also has well-defined programs       PROPERTy InsURAnCE                               injury by accident or occupational disease    the accidents and emergency situations       actively planning to deploy the industry-
     premature babies, birth defects and        covering In-Patient Care and Out-Patient   Sanad’s property insurance program               in the normal course of the employment        they face while traveling outside the        best internet applications and electronic
     congenital deformation, incubators         Care. The In-Patient program covers:       comprises of three types of policies: Fire and   in the insured’s business. In addition, it    Kingdom, such as trip cancellation, loss     services that will ensure smooth customer
     and intensive care units, in addition to   • Medical operations and day surgeries     Allied Perils, Property All Risks Policy and     insures the legal liability of the employer   of personal property, and baggage delay.     interaction.
     vaccines stipulated by the Ministry of     • Hospital bed and recuperation unit       Householder Insurance. The Fire and Allied       towards his employee’s personal injury        The policy also compensates the insured
     Health, circumcision and ear piercing        charges                                  Perils Policy covers residential, commercial     by accidents that may occur in the            for medical emergency cases, according
     for newborns, and all other medical        • Companion’s stay and living expenses     and industrial properties and their contents     normal course of the employment in the        to the terms of the policy.
     procedures recommended for the             • Medication and medical equipment         specified in the contract resulting from fire,   insured’s business.
     safety of infants. As this comprehensive   • Intensive Care Unit                      lightning or allied perils.
     approach to childbirth needs consistent                                                 The Property All Risks Policy offers a         CARgO InsURAnCE
     medical       supervision     throughout   The Out-Patient coverage includes:         more comprehensive insurance coverage            In the fields of marine and cargo
     pregnancy phases, the Sanad program        • Medical examinations (by consultants     than the policy against fire and allied          insurance, Sanad offers three insurance
     offers full coverage for the mother          and specialists at the chosen medical    perils, and covers accidental loss or
     including natural and Caesarean              service providers)                       damage to the insured property.
     delivery, and pregnancy and post-birth     • Required scans and lab analysis for      This policy is considered
     complications.                               each case                                appropriate for
      Another endearing feature of Sanad’s      • Preventive measures specified by the     large commercial or
     program is that during emergencies,          Ministry of Health, such as              industrial businesses.
     its customer is not bound to any             vaccinations for children                  The Householder
     specific medical center or hospital,       • Prescribed medication                    Insurance        Policy
     or insurance category hospitals.           • Pre-existing medical cases, chronic      offers protection for
     Customers are granted a wide                 diseases and prescribed medication       residential buildings
     selection of hospitals and medical           for those patients
     centers, both in the Kingdom and           • Endoscop
     overseas. Once the policyholder
     notifies Sanad of a case, the company      mOTOR InsURAnCE
     will follow up and finalize the            Motor insurance is another key product
     procedures and arrange treatment           offering from Sanad’s stable. This
     if   necessary,      following    which    policy provides cover for structure
     reimbursement can be claimed by            damage or loss of both private
     submitting the required documents          and commercial vehicles,
     and invoices.                              along with accessories

36       MUHARRAM 1430 | JANUARY 2009                                                                                                                                                                                            THE COOPERATIVE HEALTH INSURANCE                     37
                                                                                                                                                   to follow for therapeutic interventions. The   designed to offer specialized health            sector. Good investment opportunities
                                                                                                                                                   ceiling has been identifiedon the basis of a   services.     Meanwhile, the Ministry           are available, even in major cities.

     minister of health and Chairman, Council
                                                                                                                                                   careful study on the costs and treatments in   continues to construct model primary            However, it would be difficult for me to
                                                                                                                                                   private sector hospitals and clinics.          health centers under the project of the         provide an estimate of expected future
                                                                                                                                                    The continuing expansion of the               Custodian of the Two Holy Mosques               expansion in the private sector. Though

     of Cooperative health Insurance:                                                                                                              Ministry’s network of hospitals and
                                                                                                                                                   health centers is very much in line with
                                                                                                                                                                                                  for the establishment of 2000 health
                                                                                                                                                                                                                                                  we encourage growth in this sector, the
                                                                                                                                                                                                                                                  extent of new expansion will depend
                                                                                                                                                   the Kingdom’s development policies.             The Ministry also plans to complete the        upon the initiatives of professionals.

     Quality healthcare for all residents                                                                                                          Development of infrastructure and
                                                                                                                                                   services is a continuing process, and this
                                                                                                                                                   applies in the healthcare sector too just
                                                                                                                                                                                                  establishment of mental health hospitals
                                                                                                                                                                                                  to cover all regions of the Kingdom, as
                                                                                                                                                                                                  well as the National Health Laboratory.
                                                                                                                                                                                                                                                  There is a school of thought that
                                                                                                                                                                                                                                                  advocates specialized hospitals and
                                                                                                                                                   as in other vital areas. Our governors are     The laboratory occupies 132,000 square          another that favors profit-based or
                                                                                                                                                   giving proper care and attention to those      meters of land generously donated by            commercially operated government
     By Mustafa Shihab                                                                                                                             social requirements. As you know, the          His Highness the Crown Prince. It will          hospitals. which of the two philosophies
                                                                                                                                                   Kingdom’s leaders have always asserted         cost a total of SR 320 million.                 do you consider adopting? And why?
     In this special interview, Saudi Minister of                                                                                                  their keenness to improve the quality of                                                       The Ministry seeks to raise the performance
                                                                                                                                                   services and make them accessible to           what are your thoughts on the future            level of its health facilities and increase
     Health Dr. Hamad bin Abdullah Al-Mane                                                                                                         citizens all over the country.                 status of the health sector in the Kingdom?     efficiency and quality as well as the
     rolls out measures that are being taken to                                                                                                     The generous support of the Custodian         The Ministry of Health wants to ensure the      satisfaction levels of the beneficiaries.
                                                                                                                                                   of the Two Holy Mosques King Abdullah          provision of healthcare for all residents of    We are conducting several studies now
     achieve the Kingdom’s vision of providing                                                                                                     bin Abdulaziz Al Saud and his Highness         the Kingdom, through specialized centers,       to select the most appropriate model.
     quality healthcare for all residents through                                                                                                  the Crown Prince continues to have a vital     hospitals primary healthcare centers and        However, the strategic direction of the
     cooperative health insurance and in partnership                                                                                               impact on raising the standard of health       field visits to cover major and minor cities,   ministry is to gradually privatize its
                                                                                                                                                   services in the Kingdom. Our services          towns, ports, villages and remote hamlets.      facilities.
     with the private sector. He describes the free                                                                                                                                                                                                Full privatization of hospitals requires
     medical treatment for Saudi citizens as a right                                                                                               We hope this program will encourage new
                                                                                                                                                                                                                                                  a proper evaluation of the current
                                                                                                                                                                                                                                                  situation and the preparation of
     guaranteed by the State; he also discusses the
                                                                                                                                                   investments in the healthcare sector, particularly in                                          criteria for selecting target hospitals for
     strategy that has been prepared by the Ministry                                                                                                                                                                                              privatization. We also need to conduct
                                                                                                                                                   geographic locations that are not currently covered
     to meet the challenges of providing quality                                                                                                                                                                                                  feasibility studies for these hospitals
                                                                                                                                                   by the private sector                                                                          and prepare an executive program in
     healthcare for all.                                                                                                                                                                                                                          coordination with the Supreme Economic
                                                                                                                                                   are now comparable to those of the             Undoubtedly, the current expansion in           Council. Further, privatization requires
                                                                                                                                                   developed nations, and this has drawn          our health facilities will greatly improve      progressive implementation through
                                                                                                                                                   the appreciation of several international      the level of health coverage in the future.     the establishment of joint ventures
                                                                                                                                                   bodies and organizations. Saudi Arabia         Currently we have only 1.5 to 2 Ministry of     between the Ministry and the private
                                                                                                                                                   has seen a quantum leap in the number          Health hospital beds per 1000 people. If        sector, involving the gradual sale of the
                                                                                                                                                   of facilities as well as the quality of        we add the services provided by hospitals       Ministry’s shares in the target hospitals,
                                                                                                                                                   services in preventive, therapeutic,           under other governmental sectors and            starting with the privatization of property
     your Excellency, how would you                new project, the project goes through          despite the emergence of the private             diagnostic and rehabilitation levels. As       private sector, this ratio will increase        (partial or total) to the commercial
     evaluate the initiative of mandatory          several phases, starting with setting goals,   medical sector as a competitive                  for our achievements over the past years       satisfactorily, matching the average bed        operation method. As for the operation
     health insurance in the Kingdom?              then developing a plan of action, then         healthcare provider, the ministry of             or so, the numbers speak for themselves:       rates of other countries.                       of governmental hospitals commercially,
     To what extent do you deem this a             implementation, and, finally, evaluation.      health has continued to expand its               26 hospitals were in operation under the        Thus, we are very satisfied regarding          the Ministry has been cooperating with
     successful idea? what is the level of         We are currently in the process of             network of hospitals and health centers          ministry in 1426 H., including 13 new          the number of healthcare facilities, and        the private sector for several decades
     commitment of companies that are              assessing the benefits of the program, so      in recent years. Could you explain this          hospitals with the capacity of 2,925 beds,     are currently working on improving and          in operating and managing its hospitals
     required to offer insurance protection        as to develop an integrated mechanism          expansion strategy?                              and 13 replacement hospitals with the          developing the quality of services through      through various types of agreements –
     for their employees?                          for insuring the citizens. The goal is to      First, I would like to emphasize the important   capacity of 950 beds.                          quality control programs. It is expected        full operation contracts, comprehensive
     Cooperative health insurance system is        improve health services and make it            role of the private sector in providing           The Ministry has adopted a strategy of        that the Cooperative Health Insurance           operation and maintenance, hygiene
     relatively new not only to the Kingdom,       affordable. As we review the experiments       healthcare. It complements and supports          building specialized hospitals in rural        Program currently being implemented             and nutrition contracts, and so on.
     but to the entire region. The Council of      of countries that have applied the health      the government’s healthcare services, and        areas so that citizens do not have to          will contribute in a big way by improving        Meanwhile, the Ministry’s consultants,
     Cooperative Health Insurance has already      insurance system for their citizens, we        is not in competition with the government        rush to the capital when those kind of         the level of services.                          specialists and academics continue to
     started overseeing the application of the     find that the Kingdom has truly succeeded      services. The Ministry has the task of           services are needed. In this context, 19        We hope this program will encourage            consider the best systems and ways
     system to non-Saudis, and it is expected      in significantly raising the level of health   monitoring and supervising all the health        referential hospitals were accredited,         new investments in the healthcare sector,       of improving and developing health
     to include more than seven million            services. The citizens of this country         facilities. It may be added that the Ministry    covering all health areas under the name       particularly in geographic locations that       services in further cooperation with the
     residents in the near future. Just like any   deserve quality health services.               has also set a financial ceiling for hospitals   of “Health Belt System”, specifically          are not currently covered by the private        private sector.

38       MUHARRAM 1430 | JANUARY 2009                                                                                                                                                                                                      THE COOPERATIVE HEALTH INSURANCE                     39
                                                                                                                                                                                                                                                    The Edition’s guest
     There are complaints about the high              include all private sector companies and                                                     access to healthcare. The Council will       under the Ministry is 225, with 31,420       trained senior management officials in
     costs of private sector medical services.        institutions. In the final stage, the system                                                 also manage and follow up to ensure the      beds, accounting for 58.7 percent of         Health Insurance Departments within
     what is the role of the ministry to              will be applied to insurance for individuals.                                                proper delivery of services.                 the total number of beds in all hospitals    the Ministry so as to provide advance
     reduce the cost of medicines?                    The program involved coordination with                                                        Additionally, the Cooperative Health        in the Kingdom. There are a total of 387     services to beneficiaries of cooperative
     Like I mentioned earlier, the private            all relevant agencies to ensure that the                                                     Insurance Policy, which is the core          government and private sectorhospitals,      health insurance.
     sector supports and complements the              system succeeds. These included the                                                          policy approved by the Council of            with 53,519 beds, supported by 2000           The Ministry intends to operate 184 fully
     government sector, and the Ministry              Ministry of Finance and the Ministry of                                                      Health Insurance, and is attached to the     healthcare centers belonging to the          equipped hospitals to ensure provision
     oversees the national health facilities          Interior as represented by the General                                                       Regulations, has clear provisions to take    Ministry of Health. This simply means        of cooperative health insurance services
     and the private institutions.                    Directorate of Passports. Now obtaining                                                      care of violations.                          that the capacity of these facilities is     across the Kingdom. These hospitals are
      The Ministry of Health is exerting every        and renewing the residence permit or                                                                                                      sufficient to provide cooperative health     already provided with the necessary
     possible effort to monitor the prices of         Iqama is possible only after the individual                                                  Is there a specific direction regarding      insurance for citizens and residents.        manpower including trained insurance
     medical services provided in private             obtains a valid health insurance policy.                                                     the participation of the ministry’s           In order to ensure the provision            doctors and accountants. As the hospitals
     hospitals and clinics. In this regard, a                                                                                                      hospitals in providing health insurance?     of high quality health services, the         have relatively new computerized
     Health Institutions System has been              when do you expect health insurance                                                          According to the Cooperative Health          Ministry, as represented by Cooperative      information network, the staff are trained
     introduced through Royal Decree No.              to cover all citizens?                                                                       Insurance System, as issued by Royal         Health Insurance Department, has             to manage advanced accounting and
     M/40, dated 03/11/1423 H.. Article (7)           I would like to point out that the                                                           Decree No. M/10, dated 01/05/1420            held seminars and meetings, with the         information systems.
     of the decree stipulates that a committee        cooperative health insurance system                                                          H., and Cabinet Decree No. 71, date          participation of related experts, in order    The Ministry has also prepared the
     representing the various parties in the          issued by Royal Decree No. M/10, dated                                                       27/04/1420H., the Ministry, has started      to learn more about the system and its       coding of diseases covered by insurance
     health sector shall determine an average         01/05/1420H. aims at providing and                                                           the application of the System to residents   application as well as to preserve the       policies as well as the prices and contracts
     price to be charged by private private           regulating healthcare services to all non-                                                   in its health facilities as of 06/01/2005    rights of all stakeholders. Many hospitals   with insurance companies approved by
     health institutions.This price range shall       Saudi residents working in the private                                                       under the umbrella of the Cooperative        also conducted such seminars and             the Health Insurance Council to operate
     be determined on the basis of benchmark          sector, along with their families.                                                           Health Insurance.                            workshops to provide training for staff      in the Kingdom.
     standards, to ensure that costs decline            Ministerial Decree No. 71, dated                                                            The Ministry of Health enjoys several       in dealing with insurance policies,             The Health Insurance Department
     every three years. The system will require       27/04/1420H.,         stipulates that the
                                                                                                       Now obtaining and renewing                  modern medical facilities, making it         accounting procedures and other aspects      in the Ministry of Health has issued a
     classification of private health institutions.   Ministry of Health shall conduct a               the residence permit or                     possible to apply the cooperative health     of insurance.                                Guide to Cooperative Health Insurance
      The free treatment enjoyed by citizens          study on the possibility of creating an          Iqama is possible only after                insurance system and offer high quality       The Ministry has groomed many               in Health Facilities, the Ministry of
     under the guidance of our rulers is a right      organization, through which all citizens         the individual obtains a valid              services to patients. Health insurance       hospitals in the different regions of the    Health, to inform and educate workers
     guaranteed by the State to every citizen.        can benefit from cooperative health                                                          covers therapeutic and preventive care       Kingdom to provide Cooperative Health        in health insurance field.
     However, some people do not realize              insurance.
                                                                                                       health insurance policy.                    for individual and family, including         Insurance services by providing training
     the true cost and the heavy expenditures           As for its application to the citizens, the                                                emergency services, child care and in-       for administrative personnel, doctors and
     incurred by the State in order to provide        Ministry has prepared a comprehensive                                                        patient care. The number of hospitals        technicians. In addition, the Ministry
     quality healthcare services for them. The        strategy for the development of health
     cost of a patient’s admission and treatment      system (Balsam) in the Kingdom,                 and ethical standards, which match the
     in private hospitals is an indicator of the      including the creation of a national            known and accepted modern medical
                                                                                                                                                   The Ministry of Health is exerting every possible
     high prices of materials, equipment and          fund for health insurance. Under this           techniques, taking into account the state-   effort to monitor the prices of medical services
     health facilities, in addition to costs          system, all citizens will be insured            of-art in the medical field. Providers of    provided in private hospitals and clinics
     attributed to medical professionals.             under the supervision and sponsorship           the service are not allowed to solicit
     There might be slight differences in prices      of the State, to be financed through the        insurance companies for services that
     according to variations in the level and         general budget. The project has been            do not comply with these standards.
     quality of services provided to patients,        submitted to supreme authorities, and           Also, medical procedures should be
     who are free to choose the medical               it is still under study in preparation for      limited to what is necessary as part of
     institution he deems appropriate, whether        approval by the Custodian of the Two            the treatment.
     governmental or private.As explained             Holy Mosques.                                     In addition, several regulations have
     earlier, we have already set a financial                                                         been established to control the delivery
     ceiling within which the private hospitals       some companies resort to manipulate             of services, and several committees
     can charge for their services.                   the system by providing their                   have been formed in this regard.
                                                      employees with false insurance policies         The Council of Cooperative Health
     when do you expect compulsory                    only to fulfill legal requirements. How         Insurance is considered to be the
     health insurance to be applied to                do you deal with these cases?                   umbrella organization for the health
     cover all residents in the Kingdom?              The Health Insurance System has identified      insurance market in the Kingdom. It
     The Health Insurance Council has begun           the responsibilities of all participants.       issues regulations and instructions, in
     applying the system to residents as of           Article (57) of the Statute stipulates          addition to monitoring the application
     19/06/1427H. Starting with companies             that insurance companies are obliged            of the criteria related to the adoption of
     that employ 500 or more employees,               to provide services in accordance with          health facilities to provide this service
     the system has since been extended to            the generally accepted professional             to ensure that participants have easy

40        MUHARRAM 1430 | JANUARY 2009                                                                                                                                                                                                 THE COOPERATIVE HEALTH INSURANCE                     41
                                                                       Standardized electronic communications            deductions review the maximum limits of        consolidation of the electronic systems

     Medical insurance
                                                                       between the key constituents is becoming          coverage, as well as to access the service     used by hospitals and insurance
                                                                       a key feature of the health system in Saudi       at the soonest possible time.                  companies. The council felt that applying
                                                                       Arabia. The health insurance companies,            For healthcare providers, the portal          uniform standards will deliver higher
                                                                       service providers and the Secretariat             becomes a very efficient channel to            standards in the industry and benefit all
                                                                       of the Council of Cooperative Health              accelerate the process of securing speedy      participants while at the same time averting

     portal offers multiple                              benefits
                                                                       Insurance are electronically linked in the        decisions on medical treatments without        costly mistakes. The council has also
                                                                       new system, improving service levels and          going through a lot of paperwork.              stipulated adoption of the International
                                                                       efficiency across hospitals and clinics. The       Insurance companies gain from the             Classification of Diseases (ICD-10-AM) as
                                                                       system has adopted international medical          resulting reduction in administrative costs    the standard for the Kingdom’s hospitals
                                                                       coding for diagnosis, medicines and               and enhanced efficiency and customer           and health insurance sector.
                                                                       therapeutic interventions. The Information        satisfaction.                                    As a matter of fact, the compulsory
     Consumers, healthcare providers and insurance companies           Technology business and professionals                                                            insurance law has resulted in a significant
     draw distinct benefits from state-of-the-art technology used in   have been direct beneficiaries as more
                                                                       hospitals and companies become part
                                                                                                                         The number of transactions between in-
                                                                                                                                                                        increase in the number of beneficiaries
                                                                                                                                                                        from health insurance services. The
     the portal, says Saeed Al Hasanieh                                of the system. This feature looks at the          surance companies and hospitals has            expansion called for immediate qualitative
                                                                       benefits of using a medical insurance             grown considerably in recent years and         changes to meet the increase in demand
                                                                       portal, and the key technical components          the sudden increase in the load posed          and offer improved services for the
                                                                       of the system.                                    the threat of a crisis for the industry. The   insured. Under the earlier system, there
                                                                         A medical insurance portal is the               internet portal came as good solution to       would be initial paperwork, followed by
                                                                       application used by health care service           smoothen the flow of transactions. The         a (sometimes long) waiting period for the
                                                                       providers and participating insurance             large number of transactions made it es-       approval of the insurance company. In
                                                                       companies to -exchange information                sential for system developers to adopt the     addition, at times, the insurance company
                                                                       on the demand for medical services,               most modern equipment and servers, both        would oppose certain treatments as they
                                                                       and provide a beneficiaries database.             in terms of speed and capacity.                are not covered under the policy, causing
                                                                       This application mainly aims to develop            This is what prompted the Cooperative         agony for the policy holder, who would
                                                                       and establish an advance system of                Health Insurance Council to recommend          have to send the diagnosis in some
                                                                       health services, consisting of medical
                                                                       and payment features that are accepted            The health insurance portal offers several benefits
                                                                       industry benchmarks.              Electronic
                                                                       transactions link is the basic element upon
                                                                                                                         for the service providers, the insured and the
                                                                       which a medical insurance portal is built.        insurance companies
                                                                       It contributes to saving time and effort,
                                                                       and reduces the volume of work, besides
                                                                       ensuring accuracy and easy availability
                                                                       of information. It also helps to ensure the
                                                                       security of information and lends itself
                                                                       to easy periodical update, resulting in a
                                                                       modern and standardized database.

                                                                       The health insurance portal offers several
                                                                       benefits for the service providers, the in-
                                                                       sured and the insurance companies. Ser-
                                                                       vice providers will be able to instantly
                                                                       verify the authenticity of the card, the in-
                                                                       surance policy and the holder’s eligibility
                                                                       for treatment. Other details of the policy
                                                                       such as the maximum limit of insurance
                                                                       coverage for general, dental and optical
                                                                       treatments as well as the type of coverage,
                                                                       deductions and exceptions can also be
                                                                       accessed on the portal.
                                                                         For the insured, the portal is very useful to
                                                                       check the eligibility of the service, verify

42     MUHARRAM 1430 | JANUARY 2009                                                                                                                              THE COOPERATIVE HEALTH INSURANCE                      43
                                                                                                                                                                                                                                                                     guest Article
     physical form to the insurance company           where films, sound waves, X-CT and MRI          oriented about insurance offers, in addition
     to obtain approval.                              are saved, so that specialists can read these   to the management of insurance programs,
       IT companies specialized in providing          digital rays in advanced centers.               policies, and reinsurance operations. The
     e-solutions have come up with several             Health Insurance Portal depends in its         system enables a company to deal with a
     electronic services that contribute to           work on several software and technical          large volume of insurance operations, and
     facilitating the transfer of information         solutions, including, but not limited           offers ease of management across many
     on dues and payments electronically              to, e-solution presented by “Waseel”            branches in different locations.
     between insurance companies and                  Company and “Wide Systems” Company,               The system works in both Arabic and
     medical services providers. These services       the advantages of which include: being          English languages. It is enabled to produce

                                                                                                                                                                                winds of
     also offer a range of advanced solutions         multi-lingual (Arabic and English), multi-      reports and detailed and accurate statistics
     for automating various health insurance
     procedures, such as verifying the validity
                                                      calendars, and Spell Checker, in addition
                                                      to e-mail program for the appointments
                                                                                                      on the various aspects of work in the
                                                                                                      company.                                                                  Winds
                                                                                                                                                                                change at saudi
     of insurance coverage, the beneficiary’s         of patients, doctors and suppliers. This          Another program is Bremia 10, which was
     entitlement and medical approvals.
       In building the new medical insurance
                                                      solution also includes a security system,
                                                      user’s accredited IT privileges (Windows
                                                                                                      developed by 3A InfoTech, through Oracle
                                                                                                      10g technologies. Bremia 10 is compatible                                           Saudi
                                                                                                                                                                                private hospitals
     portal, the IT companies have used               Server Active directory, com+, the              with internet, intranet applications and
     state-of-the-art technologies to create an       Comprehensive Security system, and Web          added applications, and is equipped to
     integrated database. They have also used         Service/Web Application). These features        provide insurance companies with all                                                                                                            The cooperative insurance
     the multi-layered technique, the com+            were introduced to enable the doctor and        tools required to conduct risk analysis,                                                                                                        law has resulted in a positive
     technique, the latest approved security          patient to access medical internet services.    control changes in their products and                                                                                                           change that will ultimately
     systems adopted in networks and internet         They can access appointments, medical           deal with dynamic work environments.
     techniques (such as Active Directory),           reports and lab results, using Bluetooth        It also enables companies to offer their                                                                                                        improve quality standards,
     in addition to Oracle 10 database and            technology, wireless networks, and Tablet       service across multiple channels. The                                                                                                           says Saleh Al Omair, CEO,
     Microsoft SQL5002 databases. Among               PC. The system also allows the patient,         new Bremia version offers higher levels of                                                                                                      Solidarity Saudi Takaful
     the solutions included in the portal are         the physician and nurse to write on the         flexibility along with enhanced efficiency                                                                                                      Company
     the electronic medical records solutions,        computer screen using digital ink.              and processing speed, ultimately resulting
     without the use of papers and films,              ESKADENIA Medical Insurance system             in improved customer service.
     since the data about each patient is being       automates insurance mechanisms and                As the Kingdom’s medical insurance              Since the implementation of the Cooperative Health Insurance Law, the Saudi private hospitals have undergone many changes.
     kept, retrieved and analyzed, including          procedures, reduces insurance costs,            sector achieves rapid growth, the ‘e-health       Change was inevitable to tackle the challenges and new realities that emerged after the introduction of the new law. Most importantly,
     medical history, prescribed drugs, results       provides detailed and accurate records,         solutions’ have become the urgent need            more than 4.5 million persons were covered under the umbrella of health insurance and this resulted in a sharp increase in the
     of laboratory tests and x-rays?                  and ensures high level protection. It is        for service providers regardless of the           demand for healthcare services and put more pressure on the private healthcare sector in the Kingdom. The Saudi private hospitals
       Special care was taken to make the             comprehensive, and provides a great             volume of business. Over a very short             felt the change and responded in different ways in order to adapt to the new situation.
     system extremely user-friendly to help           information environment. It is linked to        period of time, the medical insurance              The Saudi private hospitals had to use standard and uniform forms such as the UCAF and DCAF, along with uniform billing formats
     medical staff who is not computer                all sections and branches of the company,       portal has proven to be more cost-effective       which was developed by the National Center of Health Insurance Standards (NCHIS). There has also been a qualitative change in
     literate. The new system helps doctors           and provides the user with updated              and user-friendly, benefitting the insured,       the relationship between healthcare providers and insurance companies who became major customers to many private hospitals.
     and hospitals to generate a full medical         records and information upon request. The       the provider and the insurance company            New technologies and systems were introduced in hospitals in order to accommodate and to properly manage the pressures brought
     report on a patient in a few minutes as          system was structured using Microsoft.Net       in terms of efficiency and response time.         about by the increase in the demand for health care services.
     all information beginning with a patient’s       techniques and Oracle database, enabling        At a time of increasing competition within         Most hospitals underwent organizational developments, change in work procedures and adopted policies to cope up with the
     complaint right up to tests, diagnosis and       users to access through Internet. Through       the industry, it is hard to ignore the benefits   change. There has also been a new emphasis on quality standards and achieving improved resource utilization. Some major hospitals
     treatment are fed into the computer.             the medical insurance system, users can         offered by the medical insurance portal.          went to the extent of providing transportation between the homes and the hospital for their female workers.
       E-health programs also include an              access medical networks and easily get                                                             The change did not carry through easily though. Hospital managements faced resistance to parts of the change, and this resistance
     integrated set of programs working together                                                                                                        was attributed to several factors mainly related to socio-psychological reasons. Uncertainty and vagueness of the anticipated change,
     to manage the medical organization:                                                                                                                fear of job loss, fear of failure to cope with the change and new work requirements, increased monitoring of staff and increased work
     electronic medical files and records,                                                                                                              load were the main factors that worried staff. For example, many doctors were reluctant to use new technology (such as computers)
     registration dates. This allows optimal                                                                                                            to get involved in the medical claims of insurance companies.
     use of all available services in health                                                                                                             Hospital managements came up with strategies to cope with the resistance to changes designed to achieve new goals. The strategies
     facilities pertaining to family, services, and                                                                                                     focused on increasing awareness among the employees, and providing orientation, training, and education. There was also due
     technical/human expertise. The portal also                                                                                                         emphasis on effectively communicating the desired change and its rationale, participation and involvement of staff at different
     includes integrated financial programs,                                                                                                            managerial levels in implementing the change, and negotiation and offering incentives and promotion opportunities. The key
     starting from the point of sale to the general                                                                                                     objective of these efforts was to convince employees of the importance and need for change.
     budget and profits/losses for of health                                                                                                             The introduction of cooperative health insurance has resulted in the Kingdom’s health-related organizations embracing change in
     facilities. Digital X (Pax)                                                                                                                        order to meet the new demands of volume, quality, diversity, technology and accessibility.
     programs, as medical                                                                                                                                The process of change continues as the Saudi private health sector is still evolving. Ultimately this evolution will help to improve
     devices, are linked to                                                                                                                             the quality of healthcare provided to patients and will encourage players to adopt more quality standards on the way to perfecting
     the computer network,                                                                                                                              the national health system.

44        MUHARRAM 1430 | JANUARY 2009                                                                                                                                                                                                       THE COOPERATIVE HEALTH INSURANCE                    45
                                                                                                                                                                                                                            Finance and Investment
                                                                                                                                                                                                                            report quotes him as saying that the
                                                                                                                                                                                                                            tools of investment in the American
                                                                                                                                                                                                                            real estate sector, which was the core
                                                                                                                                                                                                                            of the problem in US, are not adopted
                                                                                                                                                                                                                            by insurance companies in the Arab
                                                                                                                                                                                                                            world. Hence, they are not directly
                                                                                                                                                                                                                            affected, but AIG is affected because it
                                                                                                                                                                                                                            has invested in some of these tools, and
                                                                                                                                                                                                                            has outstanding mortgage insurance and
                                                                                                                                                                                                                            loans. However, the global financial
                                                                                                                                                                                                                            crisis has led to a decline in capital
                                                                                                                                                                                                                            markets, in addition to speculations of
                                                                                                                                                                                                                            slowdown in some economies. Thus, the
                                                                                                                                                                                                                            Arab world will not be immune from the
                                                                                                                                                                                  Ouda said its affiliates in               global financial system, which means
                                                                                                                                                                                  the Middle East will not be               that there is an indirect influence on the
                                                                                                                                                                                  affected, because of their strict         Arab insurance companies by way of the
                                                                                                                                                                                  control system and sufficient             fall in capital markets and the general
                                                                                                                                                                                                                            economic slowdown.
                                                                                                                                                                                  assets that would cover them
                                                                                                                                                                                                                              Ali bin Suleiman Al Ayed, CEO of Malath
                                                                                                                                                                                  financially                               Cooperative Insurance & Reinsurance
                                                                                                                                                                                                                            Company, said his organization is not

     global crisis: immunity or                                                                                                                                                 crisis would be the reluctance of some
                                                                                                                                                                                insurance companies to enter into new
                                                                                                                                                                                agreements to insure cargo.
                                                                                                                                                                                                                            exposed to any risk as it has signed
                                                                                                                                                                                                                            any insurance contract with companies
                                                                                                                                                                                                                            such as AIG. Malath’s entire investments

     limited impact?                                                                                                                                                            COnTRAdICTORy VIEws
                                                                                                                                                                                However, local insurance companies
                                                                                                                                                                                disagree. Basem Ouda, General Manager
                                                                                                                                                                                                                            are in the local market. Al-Ayed noted
                                                                                                                                                                                                                            that Malath is still fresh in the insurance
                                                                                                                                                                                                                            sector, and that its interest will focus
                                                                                                                                                                                                                            on shareholders’ funds, as well as on
     Observers and Saudi insurance companies have divergent                                                                                                                     of Arabian Shield Insurance Company,        insurance contracts that will yield
     views about the impact of the global economic crisis on the                                                                                                                says that insurance companies in Saudi      positive results for the company.
     local insurance sector                                                                                                                                                     Arabia are not the least affected by the      Ali Abdul Rahman Al-Sobaihin, Chief
                                                                                                                                                                                global crisis, considering the fact that    Executive of Tawuniya, has reassured his
                                                                                                                                                                                local companies rely on the domestic        clients and shareholders, affirming that
     The impact of the worst global economic       loan from the US government that                                               from the impact of contracts signed with      market. Quoting AIG, Ouda said its          the AIG crisis will have no impact on
     and financial crisis has cast a shadow of     helped the group avert bankruptcy. AIG                                         major global insurance companies. They        affiliates in the Middle East will not be   the organization. He said in a statement
     gloom over all sectors of the economy, and    will thus continue its insurance business                                      say that local re-insurance companies         affected, because of their strict control   that Tawuniya, the largest company
     the insurance industry is no exception.       and honor its client commitments and                                           may raise insurance rates in order to         system and sufficient assets that would     in the Saudi insurance sector, has no
     The American International Group (AIG),       insurance policies.                                                            keep up with what is happening in the         cover them financially. He also said that   re-insurance agreements with AIG in
     the world’s largest insurance company           However, some say that reality a little                                      global companies, which, have become          the number of insurance companies           its portfolio. Al-Sobaihin added that
     and the leader in life insurance and          different. Raouf Abdel-Khaliq Khalil,                                          more stringent in their conditions and        operating in the domestic market is         Tawuniya’s AIG links are limited to a few
     investments, became the first major to fall   the Arab Insurance Federation Secretary                                        increased their prices to compensate          25, including 21 companies listed on        optional reinsurance documents chosen
     when it had to be rescued from bankruptcy     General, confirmed that the current global                                     some of their losses. However, the            the Saudi stock market. He noted that       by customers or their brokers, the value
     late last year. The AIG empire includes       financial crisis will affect the insurance                                     sources refused to speculate on the           the Saudi Arabian Monetary Agency,          of which is not significant.
     a vast network of fully or partly-owned       sector in the Arab world. «This impact,                                        range of the expected hike. Any decision      which oversees the insurance sector in        The divergent opinions of the observers
     insurance companies around the world,         however, will still be less than in the                                        to increase rates needs to be carefully       Saudi Arabia, is closely monitoring all     and the industry perhaps indicate that
     but the company clarified early on that its   financial markets, banking and real estate                                     studied, they noted.                          global developments and is taking the       the impact of the global downturn on
     Asian affiliates, which are financially and   sectors». He asserted that the companies                                         While these observers believe that          necessary measures to protect the insured   the Saudi insurance sector is still being
     administratively independent, are not         operating in all Arab countries enjoy           Ali Abdul Rahman said in a     the impact of the crisis for the local        individual companies, preventing any        crystallized. Will there be complaints
     caught up in the crisis that the US parent    financial stability and will be in a position   statement that Tawuniya, the   insurance sector will be limited to an        threat to their interests.                  from the insured? Will it be business as
     was facing.                                   to reduce the risks stemming from the           largest company in the Saudi   increase in the rates, the Council of Saudi    Ashraf Bseisu, the President of the        usual for insurance companies? Only
      AIG has also declared that it owns fixed     current financial crisis.                                                      Chambers recently said the business           General Arab Insurance Federation, has      time will tell. The Cooperative Health
                                                                                                   insurance sector, has no re-
     assets worth one trillion US dollars, and       Observers in the Saudi insurance market                                      sector in the Kingdom as a whole is           stated that there is no direct impact of    Insurance magazine will keep its
                                                                                                   insurance agreements with
     that it will sell part of them, slowly, in    are certain that the crisis will affect local                                  likely to face several difficulties. One of   the real estate mortgage crisis in US       readers posted on developments over
     order to repay the $85 billion rescue         insurance companies, as they will suffer
                                                                                                   AIG in its portfolio           the consequences of the global financial      on the local companies. A magazine          the coming months.

46       SHAWWAL 1429 | OCTOBER 2008
         MUHARRAM 1430 | JANUARY 2009                                                                                                                                                                                 THE COOPERATIVE HEALTH INSURANCE                    47
                                                                                                                           Travel and Tourism

     sharm El-sheikh:
       City of peace
           and pleasure             This modern Red Sea city on the Gulf of Suez and Aqaba
                                    offers plenty to the fun loving tourist: scenic beauty, yacht
                                    trips, diving, fishing, snorkeling and of course great views
                                    of rare underwater treasures. Amira Al-Hasnieh takes us
                                    through the journey.
                                                                   It’s a world of magic and beauty. You           2017. This increase is primarily attributed
                                                                   step into this world and in a moment            to the opportunities offered by the city’s
                                                                   you are transformed into a child who            attraction as a tourism destination.
                                                                   aspires to touch all that is around you.          Looking at today’s Sharm El-Sheikh,
                                                                   This is not one of the old Seven Wonders        it is difficult to believe that this was
                                                                   of the World, but a legend that has             formerly a mountainous desert at the
                                                                   emerged relatively recently to become           confluence of Aqaba and Suez. It has
                                                                   an unmatched star destination for the           been transformed into a modern city in
                                                                   world tourist – Sharm El-Sheikh.                just over the past decade or so, linking
                                                                     This “Jewel of the Sinai” resort is located   it with other tourism destinations in
                                                                   in Egypt, and should be considered a            Egypt as well as other foreign countries
                                                                   jewel among the prime international             by land, sea and air. The city’s charms
                                                                   tourism destinations that offer recreation      and peaceful environment has made
                                                                   and relaxation. Spread over an area of          it a choice location for high-level
                                                                   424 square kilometers, the geographical         regional and international meetings
                                                                   location of Sharm El-Sheikh is what             and conferences. Sharm El-Sheikh won
                                                                   makes it rather unique. The resort lies         UNESCO’s “Cities for Peace” prize in
                                                                   at the head of the Red Sea where the            2002 along with other four cities that
                                                                   sea splits into the Suez Canal and Aqaba        were chosen from among 400 cities
                                                                   Gulf. The scenic environment that               worldwide and 76 nominations on the
                                                                   results from this combination is the basic      basis of urbanism, the environment,
                                                                   element of tourist attraction here.             civic education, the creation of cultural
                                                                     Most of the hotels in Sharm El-Sheikh         infrastructure and reinforcement of links
                                                                   are designed as resorts for tourists who        binding society together.
                                                                   would not need to look for comfort                For those familiar with Sharm El-
                                                                   and relaxation in other places. The             Sheikh, the first image that will come
                                                                   population of Sharm El-Sheikh has been          to mind is that of Na’ama, where you
                                                                   increasing rapidly and is projected to rise     can enjoy a long walk on the beach
                                                                   dramatically in coming years. The city,         adorned with classy stores, cafes and
                                                                   which has 10,000 inhabitants now, is            restaurants. A walk on the main street,
                                                                   expected to host about 132,000 people by        the so-called Balmchaya, would be the

48   MUHARRAM 1430 | JANUARY 2009                                                                           THE COOPERATIVE HEALTH INSURANCE                     49
                                                                                                                                                            Travel and Tourism
     most enjoyable. It is not for nothing that                                                                                                     also boasts a rich marine environment
     tourists call the place Sharm El-Sheikh                                                                                                        with a variety of wonderful types of coral
     Champs Elysees – the place has an                                                                                                              reefs and colorful fishes. The reserve also
     unmistakable European feel to it. While                                                                                                        has some wildlife, mainly deer, foxes,
     on the walk, you may just hop in to one                                                                                                        hedgehogs, rodents and reptiles.
     of the international restaurants to get a                                                                                                        Nabaq Reserve: Nabaq was also
     quick bite so that you are not distracted                                                                                                      adopted as a natural reserve in 1992.
     from the charm and surprise of the place.                                                                                                      It is located between Sharm El-Sheikh,
     As you proceed, you will come across a                                                                                                         Dahab and Um Adawy Valley in southern
     number of shops selling antiques, gifts,                                                                                                       Sinai, about 35 kilometers to the north of
     souvenirs and silverware.                                                                                                                      Sharm El-Sheikh.
       You may wind up your day on Na’ama
     with a night at a disco. Discotheques                                                                                                          dIVIng
     have become one of the major tourist                                                                                                           Diving is a sport that has become
     attractions and an important feature of                                                                                                        popular in Egypt recently. It is estimated
     Sharm El-Sheikh, which is known to                                                                                                             that Egypt now has about 100,000 diving
     be sleepless, regardless of the seasons.                                                                                                       enthusiasts. The country has several
     It is with the rhythms of loud music                                                                                                           locations that offer excellent diving spots,
     that tourists merge nights with days                                                                                                           especially in southern Sinai which is one
     inside those halls where prices vary                                                                                                           of the most popular diving destinations
     significantly, starting with a ticket price                                                                                                    in the world. The rare underwater
     of US$ 50, and is usually inclusive of                                                                                                         treasures make diving in these waters
     a single drink. However, some casinos                                                                                                          a unique experience. In the south, Ras
     offer a full meal to customers. Your                                                                                                           Muhammad alone hosts about 10,000
     visit fee includes DJ and dancing, and                                                                                                         divers. The other most popular diving
     Russian shows at some discos, which                                                                                                            spots are located at Ras Um Sayed and up
     are quite popular among tourists. On                                                                                                           till Altaor in the north, at the beginning
     the other hand, tourists with reservations                                                                                                     of the Gulf of Aqaba. The region now has
     in hotels far away from Aqaba Gulf are                                                                                                         more than 20 internationally recognized
     offered transportation to and back from                                                                                                        training centers where divers can obtain
     Na’ama Beach for free, four times a day.                                                                                                       their license.
                                                                                                                                                      Sailing is another sport in Sharm
     nATURAl REsERVEs                                                                                                                               El-Sheikh. Visitors from all over the
     Natural reserves at Sharm El-Sheikh offer                                                                                                      world visit here to enjoy the wonderful
     a major attraction for tourists. The most                                                                                                      atmosphere and the natural beauty of
     important tourist reserves are:

     According to the classification of some foreign                                                 According to the classification of some
                                                                                                    foreign journals, Ras Muhammad is
     journals, Ras Muhammad is one of the most                                                      classified as one of the most beautiful
     beautiful natural reserves in the world                                                        natural reserves in the world, with sea
                                                                                                    creatures of more that 20 million years.
      Ras muhammad: In 1983, Ras                   life. Coral reefs are abundant in the            From Sharm El-Sheikh, one can visit Ras
     Muhammad, which consists of the two           waters surrounding Ras Muhammad,                 Muhammad by yacht, accompanied
     islands of Tiran and Sanafir, was declared    constituting a unique formation that has         by a tour guide, who explains to you
     the first nature reserve in Egypt. Ras        a significant impact on the formation of         the road on the map and identifies the
     Muhammad is located at the confluence         natural life in the region.                      types of various colorful fishes you will
     of Suez and Aqaba gulfs, at the southern        The caves beneath the islands are attributed   see on the way.
     part of Sinai Peninsula and about 12          to earthquakes. Ras Muhammad is also              Abu Jalom Reserve: Adopted as a
     kilometers from the city of Sharm El-         home for several key types of protected          natural reserve in 1992, Abu Jalom
     Sheikh, and about 70 km from Al-Tour          birds and animals, such as Nubian Ibex in        is located on the Gulf of Aqaba, on
     city. Ras Muhammad is distinguished           mountain areas, and several types of small       the road between Taba and Sharm El-
     by its beaches of coral reefs in the deep     mammals, reptiles and insects, which             Sheikh, in an area called Wadi Alrasasa.
     surrounding water, and the colorful fish,     appear only at night, in addition to many        Splendid mountains and scenic valleys
     endangered sea turtles, and rare aquatic      important birds; such as gulls and herons.       define the beauty of Abu Jalom, which

50       MUHARRAM 1430 | JANUARY 2009                                                                                                           THE COOPERATIVE HEALTH INSURANCE                   51
     the water sport locations, which are           Night Park is one of the most famous           One of the most enjoyable
     served by more than 50 hotels and 100          locations in Sharm El-Sheikh, located
     diving centers.                                in the Um Sayed hill area. The park
                                                                                                   experiences at Sharm
      The area is also famous for fishing as        hosts several cafes, restaurants, shops        El-Sheikh is the yacht
     you can find a large number of different
     types of ornamental and regular fish.
                                                    selling souvenirs and antiques, as well
                                                    as concert and cinema theatres. The old
                                                                                                   journey to Tiran island
     Annual global competitions held here           town, on the other hand, is somewhat
     draw the participation of professionals        similar to the markets in Cairo.               do not know how to swim: just don the
     from the world over.                            The Bedouin dinner has a special flavor.      swimwear and take the plunge. Also,
      You cannot miss the famous boat trip          A bus takes you to a high plateau in           wear those magnifying glasses to see the
     in what is called the “Glass Boat” -- a        Sharm El-Sheikh at 7 p.m., where you are       depths from the surface. This trip will
     submarine with a glass bottom that enables     led to Bedouin tents. Once you choose          cost 120 pounds, including lunch.
     you to see the fish and colorful coral reefs   your seat, dinner and tea would be              The trip to Tiran includes a stopover at
     at the bottom. The journey takes 1-3 hours,    served. You enjoy the open buffet dinner       Cleo Park, which is a popular family fun
     and will cost 40 Egyptian pounds per           that is accompanied by entertainment in        spot that offers a variety of games.
     person. The submarines are available in        the form of acrobatic shows and local           You can also opt for a special trip on a
     various forms and sizes, bear names such       dances. The cost of this Bedouin dinner        yacht that is exclusive to your family or
     as Sea Scope and Aquascope.                    trip ranges between 120-150 pounds             group. It will cost $350 to rent a yacht
     The dolphin show at Sharm El-Sheikh is         (one riyal is equivalent to 1.48 pounds),      for a full day (9 a.m. to 5 p.m.), but you
     another tourist attraction. Usually there      inclusive of transportation.                   are free to swim, snorkel and fish during
     are two shows daily, each attended by                                                         those hours.
     more than 500 people. You can ride on          TRIP TO TIRAn                                   What best way to conclude the trip
     the back of a dolphin and swim with it         One of the most enjoyable experiences          other than visiting the Sharm El-Sheikh
     for a price of $ 10.                           at Sharm El-Sheikh is the yacht journey        malls! You can go to the Na’ama Bay
                                                    to Tiran island. Over there, you will see a    Mall or the small Mina Mall and buy
     PARKs And BAdAwI dInnER                        Russian sunken ship called Gordon Reef.        your souvenirs before heading back
     Tourists have the option of visiting the       During this trip, the yacht drops its anchor   home with those pleasant memories.
     parks such as the Night Park or the old        more than once to allow the passengers
     town or attending a badawi dinner. The         to swim or snorkel. Never mind if you

52       MUHARRAM 1430 | JANUARY 2009                                                                                                           53

                                                    100 years of                                luxury time-keeping
                                                                                                 Rolex, the epitome of prestige and              a status symbol? The story dates back          from a French phrase horlogerie
                                                                                                 classic has just celebrated its centenary.      to Hans Wilsdorf, who along with his           exquise, meaning exquisite clockwork.
                                    By Javid Hassan                                              It continues to mark time where time is of      brother-in-law, Alfred Davis, registered the   Another story is that the name was
                                                                                                 the essence. It is a tribute to the world’s     trademark name “Rolex” in La Chaux-de-         meant to evoke the sound of a watch
                                    “Quality in a product or service is not what the supplier    leading luxury watch brand that a giant         Fonds, Switzerland, in 1908. The company       being wound.
                                                                                                 electronic Rolex clock displays prayer          name Rolex was registered in 1915.              Prior to registering in Switzerland,
                                    puts in,” says Peter Drucker, the noted American             timings at the Grand Mosque of Makkah             According to Wikipedia, the origin of        Wilsdorf and Davis ran their business
                                    educator and writer. “It is what the customer gets out       for the faithful, besides indicating the        the made-up name Rolex is obscure.             from London. They imported Hermann
                                                                                                 time for the next prayer in advance.            Apparently, Wilsdorf wanted a name             Aegler’s ‘Swiss movements’ into
                                    and is willing to pay for … Customers pay only for             By embodying the time-tested values           that could be easily uttered in any            England and placed them in quality
                                    what is of use to them and gives them value. Nothing         of precision, durability and exquisite          language. Some say the name came               cases made by Dennison and others.
                                                                                                 workmanship, Rolex watch has proved                                                            These early wristwatches were then
                                    else constitutes quality.”                                   to be a recession-proof brand. It is water-                                                    sold to jewelers, who inscribed their
                                                                                                 proof too.                                      The Rolex qualities                            own names on the dial.
                                                                                                   The Rolex qualities are identified with
                                                                                                 the lifestyle of the rich and the famous, the
                                                                                                                                                 are identified with the                         Rolex SA made its debut on the
                                                                                                                                                                                                watch market with the launch of
                                                                                                 royalty, dignitaries, business executives       lifestyle of the rich and                      mostly mechanical wristwatches and
                                                                                                 and other discriminating buyers. It has
                                                                                                 created its own space that reflects an aura
                                                                                                                                                 the famous                                     accessories that became renowned
                                                                                                                                                                                                for their reliability, prestige, and cost
                                                                                                 of grandeur symbolizing the art of luxury
                                                                                                 living. Film celebrities and those from
                                                                                                 the world of high fashion sport Rolex
                                                                                                 for that special effect on their audience.
                                                                                                 Paris Hilton, too, chose to promote this
                                                                                                 brand instead of her line-up of expensive
                                                                                                 watches at one of the promos.
                                                                                                   Soccer players at the University of
                                                                                                 Florida, the University of Missouri and
                                                                                                 the University of Oregon strive to put
                                                                                                 in their best performance at the Rolex-
                                                                                                 sponsored tournament. The winners
                                                                                                 get Rolex watches as their prized
                                                                                                 possession. Another high-profile event
                                                                                                 which it sponsors is the golf tournament.
                                                                                                 The event, known simply as Rolex,
                                                                                                 is the cynosure of all eyes, since the
                                                                                                 top prize carries $65,000 in cash and
                                                                                                 a Rolex watch out of the total prize
                                                                                                 money worth $ 190,000 distributed on
                                                                                                 the occasion. Another sporting event
                                                                                                 that Rolex has supported for many years
                                                                                                 is equestrian, which was one of the six
                                                                                                 major tournaments that it sponsored
                                                                                                 this year on two continents.
                                                                                                   What is the secret behind the magnetic
                                                                                                 pull of Rolex that has transformed it into

54   MUHARRAM 1430 | JANUARY 2009                                                                                                                                                        THE COOPERATIVE HEALTH INSURANCE                   55
     (from a few thousand to more than one
     hundred thousand U.S. dollars).
      Since then, it has come a long way
     as the maker of the largest single
     luxury watch brand with estimated
     revenues of around $ 3 billion in 2003.
     “Business Week” ranked Rolex top
     among all watchmakers that produces
     about 2,000 watches per day. Overall,
     it stood at #71 on its 2007 annual list of
     the 100 most important global brands.
      The brand image of Rolex got a
     boost when Ian Fleming’s James Bond
     character was shown wearing a stainless
     steel luminous dial Oyster Perpetual in
     his series of spy thrillers. CNN chief
     Jim Walton lent his weight to this
     brand when he said, in an interview to
     Broadcasting & Cable magazine, that
     CNN could be compared to a watch.
     “Rolex means something to people. It’s
     a quality product, it’s expensive.”          Fakes and ‘recycling’ worry dealers
      The cost of a Rolex can range from
     $3,500 to $25,000. Rolex Submariner          If imitation is the best form of flattery,     buy back watches from individuals or
     secured an iconic status for its style       then Rolex should feel flattered. There        companies. We get deliveries only from
     as well as its design. It embodies           are scores of websites for the promotion       the watchmakers, so you can be totally
     elegance and exquisite workmanship           of fake Rolex brands.                          sure that the watch you are buying from
     and has become a watch in a class of           “You can find Rolex replica watches and,     us is brand new and totally authentic,’’
     its own. It stole the limelight through      of course, the best selling Rolex Replica      says Abdul Wahed Ahmed Al Suwaidi,
     other James Bond movies and has since        models: DayJust, DayDate, Submariner,          of Siddiqi & Sons, a leading distributor
     become internationally recognized            Yacht Master, ...Global Rolex replicas         of luxury watches in the UAE.”
     as an icon of personal wealth. The           are the best fake Rolex watches on the         In this context, authorized watch retailer
     Rolex submarine is waterproof up to a        market”, boasts one of them. Fake Rolex,       like Alrashid Cyber Mall in the Eastern
     depth of 100 meters making it the first      Omega and Patek watches, are widely            Province offers a warranty against any
     choice of many swimming and diving           available for less than $30.                   potential defects in the watch. This
     professionals.                                 Watch companies point out that their         policy legitimizes the sale and protects
      The reason is that it is made of either     main worry about fakes is not so much          the consumer from possible fraud.
     904L stainless steel or gold. One            the monetary losses but the damage done        The Saudi dealer says nearly all luxury
     noteworthy feature of 904L stainless         to the brand image. “We don’t risk losing      watch brands forbid internet sale of
     steel is that it is corrosion resistant,     any customers to imitations. Nobody who        their products, “which means that
     thanks to the rigid quality control of       really wants to buy a genuine Chopard          only unauthorized dealers carry these
     Rolex, which has its own foundry.            will even think of buying a fake one,’’        brands online. Alrashid Cyber Mall is a
     Another highlight is the trip lock           says Abdul Wahed Ahmed Al Suwaidi.             rare exception among online retailers,
     system which adds additional safety          “But he might see his driver also sporting     since it offers only authorized watches,
     to the watch.                                the same watch, even if it’s a fake.”          including some high-end watch brands
      The status symbol of the Rolex brand          Another vexing problem for dealers           you can’t get elsewhere in the United
     has spawned a thriving business in pre-      is recycling. Many people who receive          States”, it claims.
     owned watches that can range up to           luxury watches as gifts—from big                 The UAE and Saudi Arabia are ranked
     $25,000 for the Rolex Pearlmaster or         companies or perhaps members of the            among the top 15 importers of Swiss
     18-karat gold Rolex Presidential. There      royal families—sell them back to the           watches. Last year, Dubai alone imported
     are also a large number of dealers who       retailers, who see an opportunity to make      roughly 700,000 premium watches
     buy and resell them to the general           a fast buck.                                   –nearly one watch per inhabitant. Watch
     public. A and E Watches is one site            “We are absolutely against such a practice   imports from Switzerland increased 15
     that claims to sell them with certified      generally followed by unauthorized             percent, while those from Asia surged by
     papers and warranties.                       watch sellers. In fact, we refuse to           26 percent.

56       MUHARRAM 1430 | JANUARY 2009                                                                                                         THE COOPERATIVE HEALTH INSURANCE   57
                                                                                                                                                                                                                                                       Report and Analysis

     A comprehensive overview of the
                                                                                                                                                 main objectives, the various committees
                                                                                                                                                 in operation and the budget.
                                                                                                                                                   The second chapter of the annual report

     Kingdom’s health insurance sector
                                                                                                                                                 tackles the achievements of the Council’s
                                                                                                                                                 General Secretariat. The main achievement
                                                                                                                                                 of course is the application of the
                                                                                                                                                 compulsory insurance system to extend
     CCHI’s first annual report says insurance premiums                                                                                          coverage to all Saudis and non-Saudis
                                                                                                                                                 working in the private sector. Till the end
     expected to exceed sR 5 billion in 2009                                                                                                     of May 2008, the number of insured non-
                                                                                                                                                 Saudis amounted to 3,376,377, while the
                                                                                                                                                 number of insured Saudi citizens reached
                                                                                                                                                 up to 332,174. By integrating the insurance
                                                                                                                                                 record of all expatriate residents with the
                                                                                                                                                 e-governance system, the Council makes
                                                                                                                                                 sure that the authorities can verify if a
                                                                                                                                                 resident has valid health insurance. At the
                                                                                                                                                 time of compiling the report, 23 insurance
                                                                                                                                                 companies were already “rehabilitated”.
                                                                                                                                                   The annual report also explores the            The annual report also explores the challenges
                                                                                                                                                 challenges faced in the implementation           faced in the implementation of the system
                                                                                                                                                 of the system, classified in three
                                                                                                                                                 sections: interim challenges, outstanding        The presences of a large number of small       important role of information technology
                                                                                                                                                 challenges, and future challenges. One           enterprises who are classified as owners       to electronically link the insurance
                                                                                                                                                 of the most important interim challenges         of individual guarantees (less than 100        companies, service providers, the Council
                                                                                                                                                 was the fact that a significant number of        resident workers) also pose a challenge.       and employers in order to achieve the
                                                                                                                                                 people among the six million expatriate          The report also notes the lack of historical   system’s objectives.
                                                                                                                                                 residents in the Kingdom are in the              data and research reports on health              The fourth chapter of the report is devoted
                                                                                                                                                 unorganized sector of the economy and            insurance industry in the country.             to the goals and future expectations
                                                                                                                                                 it’s not easy to get information about            The third chapter of the report tackles       pertaining to health insurance services in
                                                                                                                                                 them. Other interim challenges include           the application of the cooperative health      the Kingdom.
                                                                                                                                                 the increasing rate of population growth         insurance system and the phases it has           The report includes a number of
                                                                                                                                                 and the resulting increase in the demand         gone through, starting with companies          supplements, including the health
                                                                                                                                                 for health services, and the emergence           that employ more than 500 workers in           insurance system, a list of companies
                                                                                                                                                 of many non-communicable diseases                the first phase to those that have 50-98       rehabilitated by the Council, a list of
                                                                                                                                                 such as blood pressure and diabetes,             workers in the fourth phase.                   health services providers accredited
                                                                                                                                                 which contribute to increasing the cost           Among the future challenges facing            by the Council, and the organizational
     The Kingdom’s health insurance industry       contributor to the national economy.            the Council has introduced standards and      of medical services in the long term. The        the insurance industry in Saudi Arabia,        structure of the Council and its General
     has achieved dramatic growth in recent         The first annual report of the Council of      requirements for insurance companies and      low level of insurance awareness in the          the foremost is the task of reaching out       Secretariat.
     years, especially since the introduction of   Cooperative Health Insurance (CCHI) traces      service providers regarding the coverage      community, divergence of opinion on the          to target populations in remote areas,           The General Secretariat of the Council
     the cooperative health insurance system       the growth of the industry in recent years.     for treatment costs. The standardization      subject, lack of expertise and national          especially in the absence of an integrated     intends to undertake numerous studies,
     in 2006. Annual insurance premiums,           The report, published recently, covers the      of the medical coding system, forms of        staff, lack of specialists in the industry and   network to provide health services. The        including a national field study to assess
     which amounted to about SR 800                development of the CCHI organization and        claims and medical billing to be adopted      absence of reliable statistical data are the     non-completion of the health insurance         the impact of the new cooperative health
     million in 2003 are expected to cross         the General Secretariat’s efforts to regulate   in correspondence between health-care         other interim challenges mentioned in the        infrastructure, particularly in the medical    insurance system.
     the SR 5-billion mark in 2009. It is not      the health insurance sector in cooperation      providers and insurance companies is          report. The inability of the health service      service centers in those remote areas, and       The first annual report of the Council
     as though insurance was non-existent in       with all industry partners. The report will     another achievement of the Council.           providers in the private sector to meet          the absence of a pricing policy approved       leaves no doubt in anybody’s mind about
     the Kingdom before the introduction of        be an asset for researchers and academics        The report is considered to be a reference   all the requirements of the service is also      by competent authorities is another            the keenness of the Council to develop
     the new law. Insurance activities in the      interested in the development of the health     document as it contains summaries             listed as an interim challenge.                  challenge to be overcome. The increase         and regulate the health insurance services.
     earlier years were primarily based on         insurance system in the Kingdom.                of most of the activities accomplished          Outstanding challenges are related to the      in health insurance premiums and the           One of the promises that it holds out is to
     imports and oil, and in recent decades,        It includes an account of the changes          towards the implementation of the             absence of world-class local and regional        resulting burden on the beneficiaries is       conduct periodic comprehensive surveys
     several foreign insurance companies had       introduced in the health insurance              cooperative health insurance system,          re-insurance companies which may result          another future challenge, says the report.     to determine the health of the system
     set up business in the country. The recent    sector and the accomplishments of the           since the issuance of Royal Decree No.        in costly reliance on global re-insurance         The report underlines the importance          itself – in other words, to ensure that
     industry growth as measured by the total      General Secretariat. It says the number of      (m/10), dated 01/05/1420H. (1999)             companies. There is also a shortage              of spreading awareness about insurance,        enough healthcare facilities are available
     premium amount is an indication that          approved health service providers have          which initiated the process. The first        of claims management companies                   and the multiplicity and diversity of          to meet the expected increase in demand
     the sector is becoming an important           increased to 989. The report explains that      chapter explains the Council’s mission,       engaged in managing medical claims.              health insurance policies. It also notes the   for services.

58       MUHARRAM 1430 | JANUARY 2009                                                                                                                                                                                                     THE COOPERATIVE HEALTH INSURANCE                       59
     Insurance Analysis
     Reports & glossary
     All RIsKs                                        cover (but only as regards a change in risk        InsURABlE InTEREsT
     A property insurance which covers any            where the carrier is the same as before) and       If an insured wishes to enforce a contract of
     accidental loss or damage that is not            at renewal (but only as regards a change in        insurance before the Courts he must have
     specifically excluded under the policy.          risk where the carrier is the same as before).     an insurable interest in the subject matter
                                                      The scope of the duty may be modified by           of the insurance, which is to say that he                                                                                                                                           COOPERA
                                                                                                                                                                                                                                                                  ERATIV                     HEALTH INTIVE
     ATTAChmEnT dATE                                  the terms of a proposal form.                      stands to benefit from its preservation and                                                                                                                                                  SURANCE
                                                                                                                                                                    COOPE INSURANCE                                                                               H INS E   COOPERATIVE
                                                                                                                                                                                                                                                                                                                                                                                          January 2009
                                                                                                                                                                                                                                                                                                                                                                                                       , Issue 4

     Another term for inception date, being the         Should a person seeking insurance/               will suffer from its loss.                                                                                                                         Augus

                                                                                                                                                                                                                                                                       URAN HEALTH INSURANCE
                                                                                                                                                                                                                                                                 t 2008,

                                                                                                                                                                                                                                                                           Issue 2

                                                                                                                                                                                                                                                                                                                                                                                                  AND              INVEST
     date on which an insurance or reinsurance        reinsurance fail to disclose a material fact         In non-marine insurances, the insured must                        8, Issue
                                                                                                                                                                                                                                                          Insura           and In                                      October 2008, Issue 3
                                                                                                                                                                                                                                                                                                                                                                                          Global crisis
                                                                                                                                                                                                                                                                                                                                                                                         limited impa
                                                                                                                                                                                                                                                                                                                                                                                                       : immunity
                                                                                                                                                                                                                                                                    nce...       vestmen                                                                                                               ct?
     contract comes into force.                       then this may lead to the avoidance of the         have insurable interest when the policy is                                                                                                      The Po
                                                                                                                                                                                                                                                         and a
                                                                                                                                                                                                                                                               Promisi r Revenues
                                                                                                                                                                                                                                                                                                                       SUPPORTING COMPANIES PRESENT NEW                                                                        CORPORAT
                                                                                                                                                                                                                                                                        ng Futu                                                                                                                                                            E PROFILE
                                                      relevant insurance or reinsurance by the           taken out and also at the date of loss giving rise                                                                                                                     re                                     INVESTMENTS IN INSURANCE SECTOR
                                                                                                                                                                                                                                                                                                                                                                                                                               Allianz Sau
                                                                                                                                                                                                                                                                                                                                                                                                                              Local know
                                                                                                                                                                                                                                                                                                                                                                                                                                          di Fransi:
                                                                                                                                                                                                                               ORLD                                                                                    INSURANCE COMPANIES AND BANKS:                                                                                     ledge, globa
     CERTIFICATE OF InsURAnCE                         underwriter. The consequences of non-              to a claim under the policy. In life insurance                                                           MORRO
                                                                                                                                                                                                                       W’S W solutions
                                                                                                                                                                                                                                                                                                                       COMPETITION OR COMPLEMENTATION?
                                                                                                                                                                                                                                                                                                                                                                                                                              reach and exp
                                                                                                                                                                                                               TO                c ne
                                                                                                                                                                                                                        Electroni costs - saving tim
     Depending on the context this term               disclosure may be modified by the terms of         the insured must have insurable interest must                                                                 Minimiz
                                                                                                                                                                                                                               ing                                                                                     INSURANCE LAW BETWEEN THE MONETARY
                                                                                                                                                                                                                                                                                                                       AND THE INSURANCE COUNCIL

     may refer to:                                    the relevant insurance/reinsurance.                when the policy is taken out and in marine                                                                              CTION
                                                                                                                                                                                                                          LL DIRE insurance
     (a) A document which evidences                                                                      insurance the insured must generally have                                                               FROM Aan commercial
                                                                                                                                                                                                                                                                                                                                       THE EFFECT OF MEDICAL INSURANCE
                                                                                                                                                                                                            n the co
                                                                                                                                                                                                                    oper                                                                                                                           ON MEDICAL SERVICES:
         the existence of insurance cover             ExClUsIOn                                          insurable interest at the date of loss giving                                                                                                                                                                                                                    Positive or Negative?

         but which does not detail all its            A term in an insurance or reinsurance              rise to a claim under the policy.
                                                                                                                                                                                                                                                                                                     In All
         terms which are contained in a               contract that excludes the insurer or reinsurer                                                                                                                                                                                       The Pu
                                                                                                                                                                                                                                                                                                  blic an
                                                                                                                                                                                                                                                                                                       d Healt
                                                                                                                                                                                                                                                                                                              Direc   tions
                                                                                                                                                                                                                                                                                                               h Insura
                                                                                                                                                                                                                                      Incide                         t are th        e                                  nc
                                                                                                                                                                                                                                                                              e Bene –
         separate policy of insurance. Certain        from liability for specified types of loss. An     lIABIlITy InsURAnCE                                                                                               INSURA
                                                                                                                                                                                                                                  NCE        nts

                                                                                                                                                                                                              HEALTHthe economy       by Hea and Treatm                                                                                                                                                              THE KING
                                                                                                                                                                                                            E                                lth Ins         e
         certificates are required as a matter of     exclusion may apply throughout a policy or         An insurance which covers the insured against                                              PERATIV
                                                                                                                                                                                            COOg contentment and bu
                                                                                                                                                                                                                                                     urance nts not Cove                                                                                                                                                      DOM’S W
                                                                                                                                                                                            Creatin                                                        !                   red                                                                                                                                     AGAINST
         law in the United Kingdom, for               it may be limited to specific sections of it. In   third party claims or, in the case of employer’s                                                                                                                                                                                                                                                                      SMOKING
         example for motor insurance.                 certain circumstances an exclusion may be          liability insurance, claims by employees,                                                                                                                                                                                                                                                                                                        1

     (b) A document that is issued by a               limited or removed altogether following the        subject to specified terms and conditions.                                                                                                                                                                                                                                                1

         coverholder which evidences the              payment of an additional premium.
         existence of insurance cover and
         details the terms of such cover.             ExTEndEd REPORTIng PERIOd
                                                                                                         lImIT OF IndEmnITy
                                                                                                         Another term for policy limit. It refers to the                                                            15,000 copies
         No policy of insurance is issued             The period after the expiry of a claims made       maximum amount payable under a policy of
         where such a certificate is issued.          policy in which claims under that policy must      insurance or reinsurance, either overall or with        Distributed to health insurance makers in the Kingdom
                                                      be made if they are to be covered. It may be       reference to a particular section of a policy.
     ClAIm                                            possible for an insured to extend this period
     Depending on the context this term
     may refer to:
     (a) a demand made by a policyholder on
                                                      on payment of an additional premium.

                                                      FIdElITy InsURAnCE
                                                                                                         mAnAgIng AgEnT’s AgREEmEnT
                                                                                                         A standard form agreement between a
                                                                                                         member and the managing agent of a
                                                                                                                                                              A quarterly magazine issued in cooperation with
                                                                                                                                                                                                                                                 15,000 copies
         his insurer(s) for payment or some           A type of insurance which is designed to           syndicate on which the member participates           The Cooperative Health Insurance Council                                                                                                           Issue dates:
         other contractual benefit under an
         insurance policy;
                                                      protect a firm from losses caused by the
                                                      dishonest acts of its employees.
                                                                                                         which sets out the powers of the managing
                                                                                                         agent and the obligations of the managing
                                                                                                                                                              Distributed across the health insurance sector in the Kingdom
     (b) a demand made by an insurer                                                                     agent and the member towards one another.            For advertising:
         on its reinsurer (s) to be paid under a      gRACE PERIOd                                        There are two forms of managing agent’s                                                                                                                                                                          April
                                                                                                                                                              Tel: +966 (1) 462 3632
         reinsurance contract; or                       A short period during which cover under          agreement: the managing agent’s agreement            Fax: +966 (1) 4612966                                                                                                                                            July
     (c) a demand made by a third party on            an annual policy may be extended beyond            (general), which applies to every member             Riyadh, Kingdom of Saudi Arabia
         a policyholder to be compensated for         its expiry date to allow for the payment of        that has a members’ agent and the managing           Email:                                                                                                                                 October
         some injury, damage or loss for              a renewal premium. The privilege will be           agent’s agreement (corporate) which applies
         which the third party blames the             lost if the insured rejects the proposed           to every member that does not have a
         policyholder.                                renewal terms, by his actions or words.            members’ agent. Copies of current versions           A quarterly magazine issued in cooperation with
      A claim is payable under an insurance or        There are no grace periods in motor or             of these agreements are annexed to the               The Council of Cooperative Health Insurance                                                                                                                                                                                                 Issue dates:
     reinsurance contract if it is caused by an       marine insurance.                                  Agency Agreements By law.
     insured peril and it is not excluded under
     the terms of that contract.                                                                                                                              For advertising:                                                                                                                                                                                                                                      January
     dUTy OF dIsClOsURE                                                                                                                                       Talal Idelbi
     The duty of every person seeking insurance                                                                                                                                                                                                                                                                                                                                                                        April
                                                                                                                                                              Tel: +966 (1) 462 3632
     or reinsurance to inform the insurer/reinsurer
     from whom a quotation for insurance/                                                                                                                     Fax: +966 (1) 4612966                                                                                                                                                                                                                                         July
     reinsurance is sought of every material fact.                                                                                                            Riyadh, Kingdom of Saudi Arabia
     The duty arises when seeking new insurance/
     reinsurance, when seeking a variation of                                                                                                                 Email:                                                                                                                                                                                                                             October

60        MUHARRAM 1430 | JANUARY 2009
          SHAWWAL 1429 | OCTOBER 2008
                                                                                                                                                                     Around The world
                                                                 The Japanese universal public health
                                                                 insurance system, primarily based on a fee-

                                                                 for-service payment system, has worked
                                                                 well for the Asian nation, according to
                                                                 experts close to the subject.
                                                                 The system was first introduced for private
                                                                 sector employees under the country’s
                                                                 health insurance law of 1922, the
                                                                 implementation of which was delayed

      from the Japanese model?
                                                                 until 1927 due to the Great Kanto
                                                                 Earthquake of 1923. Prior to this very
                                                                 few private companies offered health
                                                                 insurance to their employees with even
                                                                 fewer programs designed to provide
     Sarah Abdullah traces the development of the modern         workers with employee assistance as
                                                                 specified in the factory law of 1911.
     Japanese health insurance system and asks if Saudi Arabia   The health insurance law was enacted
                                                                 to protect workers, but coverage offered
     can benefit from the model                                  under the law was partial and benefits were
                                                                 incomprehensive. The law stipulated that
                                                                 coverage be provided to workers of mines,
                                                                 factories and transportation companies
                                                                 with 10 employees or more. Those with
                                                                 annual income of more than 1200 yen were
                                                                 excluded, with coverage allowed only for
                                                                 the employees themselves for a limited
                                                                 period of 180 days. Besides, dependents
                                                                 were not offered any coverage.                The health insurance law was enacted to protect
                                                                 Facing a financial crisis in 1929 due to      workers, but coverage offered under the law was
                                                                 the global Great Depression, the Japanese
                                                                 health insurance system managed to
                                                                                                               partial and benefits were incomprehensive
                                                                 gradually gain financial stability as
                                                                 the nation’s economy began to grow            In 1954, the government set aside a           Nonetheless, some Japanese citizens
                                                                 following the crisis. Even during World       billion yen for the first time to subsidize   explained their experiences with their
                                                                 War II (1939-45) the health insurance         government- managed health insurance          national insurance system as less than
                                                                 system continued to gain strength and         with the goal of attaining universal public   adequate. “I do not feel that the Japanese
                                                                 was extended as part of a government          health insurance coverage in 1961. Upon       insurance system is the best,” explained
                                                                 effort to strengthen the country’s labor      its debut the benefits covered 100 percent    K. Nakayama, a Japanese professional
                                                                 force. The government also created the        of costs for insured people and 50 percent    currently working in Riyadh. “As most
                                                                 Ministry of Health and Welfare in 1938        for their dependents in employer-based        people use the social health system, private
                                                                 and introduced region-based national          schemes. However, the national health         insurance is only used as a supplement.
                                                                 health insurance in the same year.            insurance covered only 50 percent for         The good part of the system may be the
                                                                 In the decade following World War             heads of households, which was raised         Japanese regulations but the problem is that
                                                                 II, Japan’s social security system and        to 70-80 percent in 1980. The national        some people use the system incorrectly. As
                                                                 health insurance sector improved further      health insurance did not offer insurance      in other parts of the world, Japan also has
                                                                 to comply with new laws such as               cover for household members.                  its share of medical issues, such as medical
                                                                 the Labor Standard Law and Worker’s           During the last two decades of the 20th       expense increases, lack of doctors in rural
                                                                 Accident Compensation Law. These              century, several new health insurance         areas and so on”, he said.
                                                                 were introduced in 1947, followed by          schemes were introduced. Most notable         “I personally did not purchase any medical
                                                                 the National Public Service Mutual            among these was the “Golden Plan” in          insurance in Japan as I was joining a
                                                                 Aid Association Law one year later. In        1989 which was conceived as part of the       company managed system. Overall, I think
                                                                 addition to these laws a number of health     government’s 10-year strategy to promote      that the Japanese medical system runs
                                                                 insurance schemes to benefit various          health welfare for the elderly. The           without private insurance. However, in
                                                                 segments of the Japanese society were         program has since proven to be extremely      order to protect oneself from unexpected
                                                                 implemented in subsequent years.              successful.                                   high expenses for hospitalization,

62     MUHARRAM 1430 | JANUARY 2009                                                                                                                   THE COOPERATIVE HEALTH INSURANCE                      63
     uncovered medical treatment or to protect         Meals are also covered in the cost-sharing                          employee and employer, with the
     against loss of earnings, some people are         scheme with transportation charges                                  employers responsible for paying the
     buying medical insurance (especially              completely covered, maintaining that the                            employee’s share of the contribution
     cancer insurance). People’s hospitalization       cost is a reasonable one.                                           and the employer’s share to the Social
     preferences keep changing according
     to the changes in the economic climate.
                                                       The system also consists of workers’
                                                       compensation benefits in case the employee
                                                                                                                           Insurance Office. Speaking about how
                                                                                                                           the Japanese insurance system has greatly                                  Medical insurance companies licensed by the
                                                                                                                                                                                                       Council of Cooperative Health Insurance
     Therefore, I expect although not a flawless       is unable to work due to illness or injury                          benefited from its improved regulation, and
     system, more Japanese people will be              ensures that there will be no loss of salary                        commenting on how the same could apply
     buying health insurance to protect them in        in case of illness. The benefit known as                            for Saudi healthcare system in general, T.
     their golden years,” he concluded.                the Sickness and Injury Allowance can be                            Fukuyama, a Japanese professional based
     Currently, public health insurance in
     Japan is financed through individual
                                                       claimed within as little as 3 days and is equal
                                                       to two-thirds the standard remuneration
                                                                                                                           in Riyadh, said: “If Saud Arabia would
                                                                                                                           make it mandatory for also government                                          This advertisement is valid until 30/3/1430h (3/4/2009)
     contributions, employer contributions             and is paid for a period of up to 1 year                            sector employees to choose to buy medical
     and government subsidies, a system                and six months. It is reduced only when                             insurance through their offices it would be                                                                                                                National Company for Cooperative Insurance
     which accounted for 84 percent of all             an employee is already receiving other                              a big step forward in correcting problems                                                  BUPA Arabia                                                                 (NCCI) (Tawuniya)
     health expenditures in 1996. The system           benefits such as a partial payment from the                         in the system overall.”                                                                   Tel:8001160500                                                                 Tel:800124999
     includes three categories:                        employer, a disability pension, the disability                      Adopting a Japanese health insurance
                                                       allowance,      the disability employee’s                           system, such as the Employees’ Health                           The mediterranean & Gulf Insurance & Reinsurance Company                                    Saudi Arabian Insurance Company – SAICO
     • employer-based                                  pension, old- age pension, the old-age basic                        Insurance, which not only provides                                              med Gulf Tel:01 /4055550                                                                  Tel:01 /4759922
     • national health insurance                       pension, or retirement mutual aid pension,                          support to salaried workers in companies
     • health insurance for the elderly                derived from the same illness or injury. In                         but also provides coverage to other                                          Arabian Shield Insurance Company                                               Gulf Union Cooperative Insurance Company
                                                       addition, funeral expenses are paid to the                          citizens through a government-managed                                                 Tel:01 /4645943                                                                    Tel:03 /8357722
     These cover a broad range of medical              dependents who were financially supported                           health insurance scheme could be just the
     services, pharmaceuticals and even some           by the deceased to cover costs up to 50,                            model of reform for the Saudi insurance                                 Al Sagr Company for Cooperative Insurance                                         United Cooperative Assurance Company – UCA
     forms of transportation. As they cover            000 yen (about SAR 2,000).                                          system that Fukuyama is suggesting.                                                 Tel:03 /8302294                                                                      Tel:02 /6927085
     the entire population, the accessibility of       Another beneficial aspect of the plan is                             The regulation making it mandatory for all
     Japan’s health care system is considered          that it provides coverage in the form of                            citizens to be covered by insurance, giving                               Arabia Insurance Cooperative Company                                                       Al Alamiya Insurance Company
     one of the best in the world among the            maternity allowances effective in offsetting                        them a choice of public or private care is                                            Tel:01 /2153360                                                                       Tel:02 /2927085
     developed countries.                              loss of salary on the part of employees                             the key success factor that creates a win-
     The employer-based system is called               due to child birth. This coverage amounts                           win situation for all Japanese citizens.                                                                                                                 Saudi Indian Company for Cooperative Insurance
                                                                                                                                                                                                       AXA Cooperative Insurance Company
     the Employees’ Health Insurance. It is a          to two-thirds of the daily standard                                 Over the coming decades, Saudi Arabia                                                                                                                                   (“SAUDI INDIAN”)
                                                                                                                                                                                                                Tel:01 /4776706
     workplace-based system which provides             remuneration and is payable payable                                 would want to be in that league. Due to                                                                                                                                   Tel:01 /2150983
     assistance to workers of companies and to         from 42 days preceding the delivery date                            a rapidly growing population and a young
                                                                                                                                                                                                   Sanad for Cooperative Insurance Company                                   Trade Union Cooperative Insurance Reinsurance Company
     their dependent family members by paying          until 56 days after the delivery. I In case of                      demographic profile with approximately
                                                                                                                                                                                                               Tel:8001191000                                                                   Tel:03 /8994719
     insurance benefits in the event of sickness,      delivering twins,, the payments are from                            more than 60 percent of Saudis under the
     injury, childbirth and death. Large-scale         98 days preceding the delivery date.                                age of 25, the Kingdom has been actively
     companies are governed by Society-                The responsibility of the insurance                                 considering ways of improving public                                                    Allianz Saudi Fransi                                                          Al-Ahlia Insurance Company
     managed health insurance within the system        contribution is shared equally by the                               healthcare.                                                                               Tel:01 /8749700                                                                    Tel:01 /2065635
     while smaller companies are covered by
     the Government-managed national health                                                                                                                                                 malath Cooperative Insurance & Reinsurance Company                                               Saudi IAIC for Insurance (SAlAmA)
     insurance. Under the Society-managed                                                         General insured                                                                                             Tel: 8001280077                                                                          Tel:02 /6647877
                                                                                                                                   30% of the medical care expenses
     schemes, each society manages its own                                                        persons
                                                           Insured persons
     insurance program with its own benefits                                                      Elderly insured                  10% of the medical care expenses                                        Ace Arabia Insurance Company                                                Al Rajhi Company for Cooperative Insurance
     and contributions ensuring compliance                                                        persons*                         (30% for higher income persons)                                                Tel:03 /8324441                                                                   Tel:01 /4752211
     with the government regulations.
     Under the Employees’ Health Insurance                                                        Children under                                                                                                                                                                              Gulf General Insurance Company
                                                                                                  age 3
                                                                                                                                   20% of the medical care expenses                          American International Group and Arab National Bank
     Scheme dependents and family members                                                                                                                                                                       Tel:02 /2830555                                                                       Tel:02 /6516610
     can apply for coverage if they are the
     employees’ first, second, or third level of the       Dependents                             Persons aged 3-69                30% of the medical care expenses
                                                                                                                                                                                            Saudi United Cooperative Insurance Company (Wala’a)                                          Amana Cooperative Insurance Company
     immediate family and includes treatment                                                                                                                                                                                                                                                       Tel:01 /4781460
                                                                                                  Elderly insured                  10% of the medical care expenses                                           Tel:03 /8652200
     for illness or injury under any hospital or
     clinic in Japan by simply presenting the                                                     persons*                         (30% for higher income persons)
     Certificate of Employers’ Health Insurance.
                                                                                                                                                                                                                                                For more information visit our website
                                                       * Persons aged 70 or older who are not subject to the Health and Medical Services for the Elderly (they should present their
     Payments are based on a cost-sharing                Certificates of Employees’ Health Insurance as well as the Employees’ Health Insurance Certificate for Elderly insured persons)
     system shown in the following table.              * Persons subject to the Health and Medical Services for the Elderly: 10% of the medical care expenses (30% for higher income
64        MUHARRAM 1430 | JANUARY 2009
                                                                                                                                                                                                                                                      920001177 THE COOPERATIVE HEALTH INSURANCE                                                 65
                                                                                                                                                                                              Note: The names of the companies that are listed above are arranged according to their date of registration at the Council of Cooperative Health
                                                                                                                                                                                                                                                 Insurance, and not according to priority.

     we meet again
     Although we are still in early 2009, a series of compulsory new insurance
     applications are already making an impact on the Saudi market. These in-
     clude insurance coverage for health, automobile, medical malpractice and
     construction projects in progress.

      There is a rather false general impression that insurance is a new concept
     in the Saudi Arabia. Few people are aware that the insurance industry has
     been in existence in the Kingdom for about 80 years. I was astonished
     when I initially learnt this during the first meeting that my colleagues at
     the Secretariat General and I had with the insurance officials of the Saudi
     Arabian Monetary Agency (SAMA) at the end of 1421 H. (early 2001).

      I had thought that the emergence of insurance in my country was relative-
     ly new and the number of insurance companies and operators were very
     small. However, I came out of the meeting rather enlightened. Insurance
     had existed in the Kingdom since 1930s. According to a study conducted
     by SAMA, 77 insurance companies offered insurance services in the King-
     dom during that period – an indicator of the insurance volume and size of
     the industry! There was another thing that drew my attention: the demand
     to regulate this industry was raised during the tenure of Late King Faisal.    Mohammed bin Salman Al-Hussain
     However, the issue fell under Shariah restrictions which in effect prolonged   Assistant Secretary General
     the life of non-regulated insurance in the Kingdom.                            Financial and Admin Affairs
                                                                                    Council of Cooperative Health Insurance
      Now we have new regulations and by-laws that control the insurance
     market. The result is a more structured industry with more professionally
     organized insurance and re-insurance companies. We now have joint stock
     insurance companies whose shares are traded in the capital market. New
     businesses associated with this sector are also emerging.

      We ought to feel pleased with the current state of the insurance market
     which has replaced an unorganized business with huge revenues that went
     to foreign hands. It is indeed gratifying to see a well-regulated insurance
     sector that satisfies the need of the community on one hand, and at the
     same time retains the profits within the country to be re-invested in the
     national economy for the benefit of our people and country at large.

66       MUHARRAM 1430 | JANUARY 2009

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