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Saudi Arabia Adopts New Regulations to Foster Competitive Insurance Entities

The establishment of the Insurance Authority in Saudi Arabia aims to regulate the sector under a unified entity and enhance company competitiveness (Asharq Al-Awsat)
The establishment of the Insurance Authority in Saudi Arabia aims to regulate the sector under a unified entity and enhance company competitiveness (Asharq Al-Awsat)
TT
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Saudi Arabia Adopts New Regulations to Foster Competitive Insurance Entities

The establishment of the Insurance Authority in Saudi Arabia aims to regulate the sector under a unified entity and enhance company competitiveness (Asharq Al-Awsat)
The establishment of the Insurance Authority in Saudi Arabia aims to regulate the sector under a unified entity and enhance company competitiveness (Asharq Al-Awsat)

The Saudi Cabinet, chaired by Crown Prince Mohammed bin Salman, approved on Tuesday the establishment of the Insurance Authority. This move aims to foster robust and competitive insurance entities within the Kingdom.

Finance Minister Mohammed Al-Jadaan characterized this measure as pivotal within the developmental blueprint of the financial sector, a component of the Vision 2030 program designed to elevate the role of the insurance sector.

This initiative seeks to amplify its contribution to the economy, enhance job creation, and stimulate investment.

At the close of the previous year, Al-Jadaan revealed plans for the imminent establishment of an independent regulatory body for insurance. He emphasized the necessity for robust entities within the sector, capable of expanding both within and beyond the borders of the kingdom.

During that time, the minister declared his endorsement of merger activities among insurance companies within the sector.

He stressed the sector’s need for large entities and corporations that can meet Saudi Arabia’s aspirations in delivering innovative services.

The Governor of the Saudi Central Bank (SAMA), Ayman Al-Sayari, said setting up the insurance authority will boost the efficiency of the insurance sector and increase its contribution to the Kingdom's non-oil GDP.

The new independent entity will also help develop the insurance industry and create well-established insurance institutions capable of growth and competition to enhance the whole industry as well as the Kingdom’s economy.

In addition, the insurance authority will work to develop the insurance sector by providing the appropriate environment and ensuring that the interests of beneficiaries and policyholders are not affected, the governor added.

Experts, on their part, view the Cabinet’s decision as heralding a new qualitative phase for the insurance sector, one that aligns with ambitious objectives of a key pillar within the Financial Sector Development Program, an integral component of the Vision 2030 achievement.

Legal expert Fahad Al-Anzi told Asharq Al-Awsat that the presence of a unified regulatory body for insurance enhances sector performance, elevates the quality of insurance services, and safeguards the rights of policyholders.

Al-Anzi further emphasized that the establishment of this body will address the challenges facing the insurance market in the kingdom, guided by a unified vision and strategy set forth by the new entity. This approach ensures the integration of legislative, administrative, and financial solutions.

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China Approves $840B Plan to Refinance Local Government Debt, Boost Economy

Visitors walk past a shop under construction with a dragon mural at the Sanlitun shopping district in Beijing, Friday, Nov. 8, 2024. (AP Photo/Ng Han Guan)
Visitors walk past a shop under construction with a dragon mural at the Sanlitun shopping district in Beijing, Friday, Nov. 8, 2024. (AP Photo/Ng Han Guan)
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China Approves $840B Plan to Refinance Local Government Debt, Boost Economy

Visitors walk past a shop under construction with a dragon mural at the Sanlitun shopping district in Beijing, Friday, Nov. 8, 2024. (AP Photo/Ng Han Guan)
Visitors walk past a shop under construction with a dragon mural at the Sanlitun shopping district in Beijing, Friday, Nov. 8, 2024. (AP Photo/Ng Han Guan)

China on Friday approved a 6 trillion yuan ($839 billion) plan to help local governments refinance their mountains of debt, in the latest push to rev up growth in the world’s second largest economy.

The plan will be implemented over the next three years, Xu Hongcai, vice-chairman of the National People's Congress's financial and economic committee, said at a news conference Friday.

Finance minister Lan Fo'an estimated that the hidden debt of local governments was 14.3 trillion yuan ($2 trillion) at the end of 2023. Hidden debt refers to debt that has not been disclosed publicly, The Associated Press reported.

Lan said 2 trillion yuan would be allocated each year from 2024 to 2026 to help local governments resolve their debts. He estimated that the amount of hidden debt will drop to 2.3 trillion yuan ($320.9 billion) by the end of 2028.

Officials also said Friday that the ceiling to issue special bonds will be raised to 35.52 trillion yuan ($4.96 billion) from 29.52 trillion yuan ($4.12 billion) for local governments.

Lan said that the implementation of such a large-scale replacement measure indicates a “fundamental shift” in China's approach to debt restructuring and said that China’s government debt risk was “controllable.”

Analysts have called for bold, multi-trillion-yuan measures to reinvigorate the world's second largest economy, which has yet to bounce back fully from the COVID-19 pandemic.
Local government debts have ballooned partly due to high spending and low tax revenues during the pandemic, but also due to a downturn in the property industry, since sales of land use rights, a key source of local government revenue, have sagged.

The central bank loosened restrictions on borrowing in late September, sparking a stock market rally, but economists say the government needs to do more to ignite a sustained recovery. Government officials have indicated that could come at this week's meeting of the Standing Committee of the National People's Congress, which must give official approval to any new spending.

The economy has shown signs of life in the past two months. Purchase subsidies offered to people who trade in old cars or appliances for new ones helped auto sales rebound in September. A survey of manufacturers turned positive in October after five straight months of decline, and exports surged 12.7% last month, the largest increase in more than two years.

For most of the year, the ruling Communist Party appeared more focused on addressing long-term structural issues with the economy rather than short-term ones. Previous steps to boost the economy were piecemeal, seemingly aimed at keeping the economy afloat rather than sparking a robust recovery.

In recent weeks, the party has signaled a growing concern about the economy's sluggishness as it tries to meet its goal of achieving growth of around 5% this year. The central bank's monetary easing was followed by government pronouncements that it still has ample funds to pump into the economy.

Still, the longer-term goals of transforming China into a high-tech and green energy economy seem likely to remain the chief aims of the Communist Party, which doesn't face election pressures like the ones that toppled the Democrats and swept Donald Trump's Republicans to power in America this week.