Saudi Arabia’s general insurance sector is set to grow by 10.4% by 2023, driven by a robust national economy, increased vehicle sales and a thriving construction industry.
In a recent study, data analytics firm GlobalData forecasts that Saudi Arabia’s general insurance industry is set for significant growth, with a projected compound annual growth rate (CAGR) of 6.2%. This growth is expected to increase the industry’s gross written premium (GWP) from SAR 56.8 billion ($15.2 billion) in 2023 to SAR 72.4 billion ($19.3 billion) in 2027.
Earlier this year, the Saudi Cabinet approved the establishment of the Insurance Authority (IA), a unified and independent regulator for the insurance sector. This move is expected to encourage new entrants into the insurance market, thereby increasing competition and stimulating growth. It will also strengthen the market for regional and global insurers operating in the country.
“Saudi Arabia’s general insurance industry grew by 27.7% in 2022, the highest year-on-year growth in the last 13 years. Mandatory private health insurance for expatriates, an increase in vehicle sales and rising demand for natural catastrophe insurance due to extreme weather events have supported general insurance growth,” said GlobalData Insurance Analyst Anurag Baliarsingh.
Leading lines
Personal accident and health (PA&H) insurance is the dominant line of business, accounting for a substantial 62.6% share of GWP in 2023. Rising health awareness post-pandemic, coupled with rising healthcare costs due to high medical inflation, has spurred demand for private health insurance, which is expected to grow by 11.8% in 2023.
“The popularity of private health insurance in Saudi Arabia has increased over the years due to rising treatment costs, limited coverage and longer waiting times associated with public health insurance. As of July 2023, private health insurers cover more than 30% of the country’s population, up from a 10% share in 2013, according to the Council of Cooperative Health Insurance (CCHI). PA&H insurance is expected to grow at a CAGR of 6.3% over 2023-27,” said Baliarsingh.
Motor insurance is the second largest segment, accounting for 19.1% of the general insurance GWP in 2023. It is expected to grow by 5.2% in 2023, driven by increasing vehicle sales.
“Growth in motor insurance will also be supported by an increase in premium rates. A higher number of road accidents and an inflationary increase in repair costs have led to an increase in premiums. As a result, motor insurance premiums will increase by 26.7% in 2022 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% over 2023-27,” Baliarsingh said.
Property insurance is the third largest segment of the business, accounting for 11% of the general insurance GWP in 2023. The value of Saudi Arabia’s construction industry, as reported by the General Authority of Statistics (GaStat), has seen notable increases in both the first and second quarters of 2023, supporting the growth of property insurance. Furthermore, Saudi Arabia’s susceptibility to various natural disasters, including floods, droughts and sandstorms, is expected to drive the demand for fire and other natural catastrophe insurance.
Liability and marine, aviation and transit (MAT) insurance will together account for the remaining 7.3% of the GWP share in 2023.
“After experiencing massive growth in 2022, Saudi Arabia’s general insurance industry growth is expected to gradually normalise in 2023 and 2024. Sustained economic growth, favourable regulatory developments and increasing car sales will drive the growth of the Saudi Arabian general insurance industry over the next five years,” said Baliarsingh.
In another recent report, GlobalData said that the Asia-Pacific general insurance industry is expected to grow from $92.3 billion in 2023 to $141.8 billion in 2027, at a compound annual growth rate of 11.3% in terms of premiums written.
