has capped serious claims. It is also considering options to establish a central statistical underwriting and claims database.

- _Saudi Arabia_ is building a professional MTPL claims assessment firm jointly owned by the insurers to prevent claims fraud and mis-allocation. Such firms can limit the need for police involvement except in the most serious accidents.  An alternative is to remove liability and allow individual drivers to claims against their insurer.

- _Syria_ has centralized the pricing and allocation of MTPL renewals, capped claims and applied a no fault approach to maximum payouts.  It is about to introduce electronic renewals.  This has resulted in a significant jump in premiums which are now approaching sustainable levels.

_Reporting standards_

**Possibly one of the most serious regulatory flaws in the region is the lack of consistent, timely and high quality data available to supervisors and those sections of the general public and the industry who need such information.** This partly reflects the newness of some insurance markets and supervisory entities, but also is a manifestation of a desire by family and financial and industrial controlled groups to not reveal such information.  This attitude is not acceptable for financial institutions collecting funds from the public and taking on contractual liabilities and all insurers should be required to submit financial and statistical information to supervisors in electronic form according to agreed templates, timetables and definitions. If an insurer cannot accomplish this there are good reasons to question their ability to be in business.

_Supervisory structures and independence_

**As insurance markets develop they gain political power and supervisors eventually need to be given the resources and independence to act according to the public good rather than the requirements of special interests.** As noted, one solution is to place the insurance supervisor in the central bank and this may be a next step for a number of supervisors in small MENA countries.  An alternative is to establish an integrated supervisor with independent funding sources and transparent appointment and removal processes for senior personnel.

# _8.4. Improving the Tax Regime_

**Many countries at all levels of development see the insurance sector as a reliable source of taxation revenues.** While the economics of this approach are questionable if direct taxation of premiums become egregious (i.e. the premium can become larger than the potential policyholder‟s risk aversion) the ready availability of relatively reliable turnover numbers and an assumption that insurance is a luxury good often drives policy. In practice some level of taxation of risk premiums may be justified as value is being added, this is generally a small sum relative to the sum insured and claims payments are not taxed.

**However the taxation of the savings components of long term savings contracts (pensions and life insurance**<sup>**20**</sup> **) is a direct attack on thrift and implicitly involves a supertax, as premiums are normally paid out of after tax income.** Increasingly policy is to tax any excess

> 20 Life insurance is called Family Insurance in the Middle East.

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