Riyadh, Asharq Al-Awsat- During an interview conducted by Asharq Al-Awsat with the Assistant Secretary-General of the Council of Cooperative Health Insurance Mohamed al Hussein, my attention was drawn towards the Council’s determination to establish a fund to cover health insurance costs for individuals in cases that the cost of treatment exceeds the insurance policy – this was issued in a statement by the Council. Moreover, the Council is preparing a study on the management, finance and expenditure of this fund.
I was very pleased with the approach taken by the heads of the Council of Cooperative Health Insurance as it is rare to find in other government and semi-governmental institutions where fruitless bureaucracy has taken over and creativity has been killed off as a result of adherence to regulations.
By participating in developing this creative idea that is based on social solidarity to provide both citizens and residents with ideal healthcare, I believe that the scope of the fund’s beneficiaries would expand to include covering emergencies whereby those involved who do not have insurance would receive the appropriate healthcare treatment from any medical institution. This would prevent some private medical institutions from refusing to deal with emergencies based on the pretext that those involved are uninsured, which in some cases has led to death or a permanent disability.
As for financing this fund, I would suggest that the Council benefits from the process of purification [of money earned in a non Shariah-compliant manner] by financial institutions such as banks and investment companies that offer Islamic banking services, in addition to the well-known financing channels such as endowments and donations in order to finance this fund since this money does not belong to these financial institutions; therefore they cannot profit from it in any way. Rather this money should be paid to charitable institutions in order for institutions to purge themselves of it in accordance with the resolutions of the Shariah committee.
This prohibited money includes that which has been generated as a result of fines imposed by monetary institutions upon its customers who are unable to repay loans, the profits earned through non-Shariah compliant operations that have been exploited by financial institutions and the profits distributed amongst shareholders by Islamic/non-Islamic joint-stock companies. In view of the fact that there is no law that enforces financial institutions to disclose information on these funds in financial reports, the real amount that could contribute towards the fund is unclear. However, the magnitude of such amounts can be estimated because all banks [in Saudi Arabia] offer Islamic services in finance and investment.
In June 2007, the volume of Islamic finance was estimated at 312 billion Saudi Riyals (SR) whilst Islamic investment funds reached 61 billion SR. If we add to that the emerging financial companies that would soon enter the financial market, the investment funds affiliated to investment companies and cooperative insurance companies then we would have a clearer idea of the amount that could be collected by the fund to finance its operations especially that some traditional financial institutions are yet to get rid of ‘impure’ money from when they began to offer Islamic products since the board of directors refuses to make a decision in this regard. Since the Council of Cooperative Health Insurance has no authority over these financial institutions, I believe that it should address the concerned departments, namely, the Saudi Arabian Monetary Agency (SAMA) and the Capital Market Authority to consider passing a law to force the financial institutions that offer Islamic products to hand over these amounts to the health insurance fund and to disclose information regarding these amounts in their financial reports. These funds are available because this money does not legally belong to these financial institutions.
In addition, paying these amounts into the fund will accomplish one of the objectives of Shariah; it will prevent these institutions from benefiting from this money in any way. Therefore, I expect that this will be supported by the Shariah committee members provided that the fund adheres to the conditions of Islamic law in all transactions. Otherwise, it will not benefit from the multiple channels of finance, including the profits generated through non-Shariah compliant operations. All Islamic countries where there are financial institutions that offer Islamic products can benefit from this experience.
* Lahem al Nasser is an Islamic banking adviser.