Saudi insurers’ GWPs to grow over 5% in 2020, says S&P

The Saudi insurance sector’s gross written premium (GWP) is expected to record over 5% growth in 2020, S&P Global Ratings noted in a recent report.

Among key growth drivers are the likely introduction of mandatory medical insurance for Hajj and Umrah pilgrims, which can generate more than SAR 1 billion in GWP.

Additionally, the expected rise in motor insurance on the back of increasing number of women drivers, and plans to gradually reduce the number of uninsured drivers will boost the sector’s growth this year.

Other factors, such as an increased focus on job creation in the non-hydrocarbon sectors, coupled with tourist visa reforms are also likely to increase the scope of insurable assets and lead to moderate growth in the medium term.

Following 2 years of declining GWP in 2017 and 2018, the Saudi insurance sector returned to growth in 2019.

This was mainly supported by the extension of compulsory medical insurance cover to more than 2 million dependents of Saudi nationals. In addition, a number of insurers successfully repriced their loss-making medical businesses.

Despite improved profitability in 2019, the Saudi insurance sector remained less profitable than its regional peers.

However, S&P expects the sector to continue its gradual improvement in operating performance in 2020, with the introduction of new profitable plans and enhancement of underwriting discipline.