88
The banking and insurance sectors are regulated mainly by the Saudi Arabian Monetary
Authority (SAMA), which also serves as the central bank of the Kingdom of Saudi Arabia. The
SAMA was established, under two Royal decrees issued on 25/7/1371H (20/4/1952). The first
was No. 30/4/1/1046 provided for setting up the SAMA, its venue in Jeddah, and opening
branches across the country as believed to be necessary. The second Decree No. 30/4/1/1047
provided for the approval of the Charter of the SAMA, attached to the decree, and ordering its
implementation. SAMA began practising its business in Jeddah on 14/1/1372H (04/10/1952)
(SAMA, 2019c).
The SAMA has been entrusted with performing many functions pursuant to several laws and
regulations. The salient functions are “ to deal with the banking affairs of the Government; Minting
and printing the national currency (the Saudi Riyal), strengthening the Saudi currency and
stabilizing its external and internal value, in addition to strengthening the currency’s cover;
Managing the Kingdom’s foreign exchange reserves and the monetary policy for maintaining the
stability of prices and exchange rate; Supervising commercial banks, exchange dealers, cooperative
insurance companies, the self-employment professions relating to the insurance activity; finance
companies and credit information companies ” (SAMA, 2019d).
One of the core departments of SAMA is the General Department of Insurance Control, which is
responsible for Takaful. Soon after the enactment of the Law and Implementing the Regulation,
SAMA established a group of insurance supervisors to operate in its Banking Inspection
Department. Since then, the teammembers are operating as an independent department within
SAMA. They are dedicated to the regulation and supervision of insurance activities. SAMA's
Insurance Supervision Department aims towards protecting policyholders and shareholders'
rights, providing better insurance services that are fair, effective and competitive in prices and
covers, fostering the stability of the insurance market, developing insurance market in the
region including training and providing employment opportunities for Saudi nationals (SAMA,
2019e).
The Saudi Arabia government also took several initiatives towards improving market
regulations and encouraging product innovation by issuing Insurance Corporate Governance
Regulation on 21st October 2015. This regulation has 6 sections with 132 articles and its main
objective is to set high standards of corporate governance within the market while recognising
the best international practice.