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The Binder Agreement (Insurance) is a crucial document used in the Saudi Arabian insurance market when an insurance company wishes to delegate underwriting authority to a coverholder or managing general agent. This delegation must comply with SAMA regulations, Sharia principles, and the Law On Supervision of Cooperative Insurance Companies. The agreement defines the precise scope of delegated authority, including underwriting limits, claims handling procedures, and premium collection responsibilities. It establishes clear operational guidelines, reporting requirements, and compliance mechanisms while protecting both parties' interests. This type of agreement is particularly important in the Saudi market due to the unique regulatory environment and the requirement for all insurance operations to follow the cooperative insurance model in compliance with Islamic principles.

1. Parties: Identification of the Insurer and the Coverholder/Agent, including their regulatory licenses and authorizations

2. Background: Context of the agreement, including the insurer's authority to operate in Saudi Arabia and the coverholder's qualifications

3. Definitions: Key terms used throughout the agreement, including regulatory and insurance-specific terminology

4. Appointment and Scope: Terms of appointment and precise scope of authority delegated to the coverholder

5. Regulatory Compliance: Obligations regarding SAMA regulations, Sharia compliance, and other regulatory requirements

6. Authority Limits: Specific financial, underwriting, and claims settlement limits of the coverholder's authority

7. Duties and Responsibilities: Detailed obligations of both parties, including reporting, record-keeping, and customer service

8. Premium Handling: Procedures for collecting, holding, and remitting premiums in compliance with SAMA regulations

9. Claims Handling: Procedures and authority limits for claims processing and settlement

10. Compliance and Audit: Rights of the insurer to audit and monitor the coverholder's activities

11. Remuneration: Commission structure and payment terms

12. Confidentiality: Obligations regarding confidential information and data protection

13. Term and Termination: Duration of the agreement and termination provisions

14. Governing Law and Dispute Resolution: Saudi Arabian law as governing law and dispute resolution mechanisms