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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)
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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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Federal Reserve Cuts Key Interest Rate by a Quarter-point

US Federal Reserve Chair Jerome Powell attends a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, US, November 7, 2024. REUTERS/Annabelle Gordon
US Federal Reserve Chair Jerome Powell attends a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, US, November 7, 2024. REUTERS/Annabelle Gordon
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Federal Reserve Cuts Key Interest Rate by a Quarter-point

US Federal Reserve Chair Jerome Powell attends a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, US, November 7, 2024. REUTERS/Annabelle Gordon
US Federal Reserve Chair Jerome Powell attends a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, US, November 7, 2024. REUTERS/Annabelle Gordon

The Federal Reserve cut its key interest rate Thursday by a quarter-point in response to the steady decline in the once-high inflation that had angered Americans and helped drive Donald Trump’s presidential election victory this week.
The rate cut follows a larger half-point reduction in September, and it reflects the Fed’s renewed focus on supporting the job market as well as fighting inflation, which now barely exceeds the central bank’s 2% target, The Associated Press reported.
Asked at a news conference how Trump's election might affect the Fed's policymaking, Chair Jerome Powell said that "in the near term, the election will have no effects on our (interest rate) decisions.”
But Trump’s election, beyond its economic consequences, has raised the specter of meddling by the White House in the Fed’s policy decisions. Trump has argued that as president, he should have a voice in the central bank’s interest rate decisions. The Fed has long guarded its role as an independent agency able to make difficult decisions about borrowing rates, free from political interference. Yet in his previous term in the White House, Trump publicly attacked Powell after the Fed raised rates to fight inflation, and he may do so again.
Asked whether he would resign if Trump asked him to, Powell, who will have a year left in his second four-year term as Fed chair when Trump takes office, replied simply, “No.”
And Powell said that in his view, Trump could not fire or demote him: It would “not be permitted under the law,” he said.
Thursday’s Fed rate cut reduced its benchmark rate to about 4.6%, down from a four-decade high of 5.3%. The Fed had kept its rate that high for more than a year to fight the worst inflation streak in four decades. Annual inflation has since fallen from a 9.1% peak in mid-2022 to a 3 1/2-year low of 2.4% in September.
When its latest policy meeting ended Thursday, the Fed issued a statement noting that the "unemployment rate has moved up but remains low,” and while inflation has fallen closer to the 2% target level, it “remains somewhat elevated.”
After their rate cut in September — their first such move in more than four years — the policymakers had projected that they would make further quarter-point cuts in November and December and four more next year. But with the economy now mostly solid and Wall Street anticipating faster growth, larger budget deficits and higher inflation under a Trump presidency, further rate cuts may have become less likely. Rate cuts by the Fed typically lead over time to lower borrowing costs for consumers and businesses.
Powell declined to be pinned down Thursday on whether the Fed would proceed with an additional quarter-point rate cut in December or the four rate cuts its policymakers penciled in for 2025.