Saudi-based National Company for Cooperative Insurance (NCCI) has won a major contract to provide health insurance to staff and relatives of the Gulf's largest telecom firm Saudi Telecommunications Co (STC).NCCI, better known as Tawuniya, signed a three-year contract with state-controlled STC to offer health insurance to its 20,000 employees for 507 million riyals ($135.2 million), or 169 million riyals per year beginning October this year, said Ali Al-Subaihin, the firm's chief executive.
"STC is an old client: We have been providing health insurance to STC's staff since 1997," Subaihin told Reuters.
"Unlike smaller companies that would go for lower costs at the expense of good service, large employers like STC look for insurance companies that are capable of providing good service that is commensurate to the pricing".
In April, STC invited bids for the contract and restricted the tender to firms that are authorised by the Saudi central bank to offer health insurance.
STC's spokesman Mohamed al-Faraj told Reuters then that the contract covers 90,000 people, including some 20,000 STC employees. Subaihin declined to comment on this figure.
Earlier on Monday, SPA quoted Tawuniya's Chairman Suleiman al-Humayyad as saying that the contract was the biggest health insurance contract in the Arab world.
Saudi Arabia has repeatedly delayed plans to make health insurance compulsory for employers in the world's largest oil exporter.
Abdullah Al-Sharief, secretary-general of the Council of Cooperative Health Insurance, said in January the scheme would be applied by July for 1.5 million Saudis working in the private sector and their families.
"It has been implemented for Saudis but we have yet to see the full impact of this measure once the lower tiers of employers adopt the plan as large employers already provide health insurance schemes to their staff," Subaihin said.
The Council of Cooperative Health Insurance, an independent government entity supervising the compulsory health insurance scheme, is working on a mechanism to make sure employers offer health insurance to their staff, he said.
"The sector is well-regulated to ensure good quality health insurance services while at the same time it protects interests of all parties involved.
"The gradual implementation of compulsory health insurance, starting by expatriate workers then Saudis, has given the private sector time to adapt in a phased manner to the scheme," Subaihin said.
Tawuniya's shares closed Monday's session 4.74 percent higher at 44.2 riyals, outperforming both the insurance industry's index and the all-share (.TAS)> index both of which closed lower.
Since the beginning of the year, Tawuniya's stock rose 30 percent against 75.4 percent for the insurance sector's index and 18.9 percent for the all-share index.
Tawuniya, one of the kingdom's oldest insurance firms and biggest by turnover, has faced growing competition over the past three years with the licensing of some 30 insurance firms in a bid to liberalise the industry and unlock its growth potential.