By Abubakr Faizallah
Saudi insurance market maintained its strong growth trend achieving 19.7% in 2015 in Gross Written Premiums amounting to over SAR 36.5bn compared to SAR 30.4bn the previous year. The strong growth is coupled with a 10% y/y growth in net profit, reaching SAR 936m, said Saudi Monetary Agency SAMA Market Report. SAMA officials attribute this healthy growth to agency’s sustained policy of corrective actions such as enhancing the required technical reserves as well as raising the level of compliance amongst operating insurance providers in the Kingdom.
Saudi insurance market net profits registered growth across all its sectors, reflecting an actual positive change fuelled by not only a growing population but also increasing awareness of the importance of insurance as a financial product, and stricter compliance. Yet, the market still lacks great diversity of products. Health and general insurance, which include the compulsory vehicle insurance, accounted for 95% of the business. They also led growth registering 20.5% and 19% respectively for 2015. Protection and savings insurance, a sector that accounts for 3% of the market also registered a healthy 14.5% growth rate over the previous year 2014.
Retention ratio achieved growth as well registering a value of 83% in 2015 compared to 79% in 2014 reflecting a healthier market for first insurers and strengthening market leaders’ already solid possession.
The strong results came despite a parallel rise in paid gross claims, which amounted to SAR 24.5bn registering a value growth rate of 20.7% as well. Health and motor insurance claimed the lion’s share of gross claims paid with 53% of the total amount.
All looks good for the Saudi insurance industry with SAR 12.6bn invested by the operating providers, who currently employ around 10000 people and hold a Saudization record of 59% according to SAMA. It is a sizable economy with many yet to explore and probe areas. Product diversity and tailored insurance solutions may find a place characterized by rapid sustainable growth guaranteed by a growing population and strict government regulations regarding health and motor insurance.
