In Focus: Saudi’s GI Market Set For Growth

Latest snapshot report from GlobalData, this time looking at Saudi Arabia;

Saudi Arabia’s general insurance industry is set to grow at a compound annual growth rate (CAGR) of 6.2% from SAR56.8 billion ($15.2 billion) in 2023 to SAR72.4 billion ($19.3 billion) in 2027, in terms of gross written premiums (GWP), forecasts GlobalData, a leading data and analytics company.

According to GlobalData’s Insurance Database, Saudi Arabia’s general insurance industry is projected to grow by 10.4% in 2023, supported by growth in the economy, rising vehicle sales, and a booming construction sector.

Anurag Baliarsingh, Insurance Analyst at GlobalData, comments: “The Saudi Arabian general insurance industry grew by 27.7% in 2022, recording its highest year-on-year (YoY) growth over the last 13 years. Mandatory private health insurance for expats, an increase in vehicle sales, and the rising demand for natural catastrophic (Nat-Cat) insurance policies due to extreme weather events have supported the growth of general insurance.

“Also, in August 2023, the Saudi Cabinet approved the establishment of the Insurance Authority (IA), a new unified and independent regulator for the insurance sector. This will promote the entry of new insurers into the market, which will increase competition and support growth. It will also boost the market for regional and global insurers operating in the country.”

Personal Accident and Health (PA&H) insurance is the leading line of business, accounting for a 62.6% share of the GWP in 2023. Increasing health awareness after the pandemic as well as rising healthcare costs due to high medical inflation have supported the demand for private health insurance, which is expected to grow by 11.8% in 2023. Moreover, mandatory health insurance for employees of private companies and expats has contributed significantly to the growth of PA&H insurance in 2022 and 2023.

Anurag continues: “The popularity of private health insurance has increased in Saudi Arabia over the years due to rising costs of treatment, limited coverage, and longer waiting times associated with public health insurance. As of July 2023, private health insurers cater to more than 30% of the country’s population, as compared to a 10% share in 2013, the Council of Cooperative Health Insurance (CCHI). PA&H insurance is expected to grow at a CAGR of 6.3% over 2023-27.”

Motor insurance is the second largest line and accounts for a 19.1% share of the general insurance GWP in 2023. Motor insurance is expected to grow by 5.2% in 2023, supported by an increase in vehicle sales. According to the Saudi Automobile Association, the number of vehicles sold in H1 2023 stood at 338,956, an increase of 16.8% as compared to H1 2022.

Anurag adds: “The growth in motor insurance will also be supported by the rise in premium rates. A higher number of road accidents and an inflation-led rise in the cost of repairs have led to an increase in premiums. As a result, motor insurance premiums increased by 26.7% in 2022 as compared to 2021, and a similar trend is expected to continue in 2023. Motor insurance is expected to grow at a CAGR of 2.4% during 2023-27.”

Property insurance is the third largest line of business, accounting for 11.0% of the general insurance GWP in 2023. As per the General Authority of Statistics (GaStat), the value of the construction industry in Saudi Arabia has increased by 5.5% in Q1 2023 and 4% in Q2 2023, which will support the growth of property insurance. Saudi Arabia is also prone to several natural disasters, including floods, droughts, and sandstorms, which will drive the demand for fire and other Nat-Cat insurance policies.

Liability and Marine, Aviation and Transit (MAT) insurance will account for the remaining 7.3% share of GWP in 2023.

Anurag concludes: “After experiencing massive growth in 2022, Saudi Arabia’s general insurance industry growth is expected to normalize gradually in 2023 and 2024. Sustained economic growth, favourable regulatory developments, and rising automobile sales will drive growth in Saudi Arabia’s general insurance industry over the next five years.”