Vehicle insurance coverage less than 50%, sector to record robust growth: Najm CEO

He added that the vehicle insurance underwritings range between SAR 8 and 9 billion, which means doubling the number with compulsory vehicle insurance.

The CEO expected the sector to record strong growth over the coming years.   

He pointed to the development of Najm’s artificial intelligence (AI) systems since 2018, as the company managed to identify suspected insurance cases worth more than SAR 0.5 billion. In addition, fraud cases worth nearly SAR 100 million in vehicle insurance were recognized.

This, accordingly, enhances the profit margins of the insurance sector by cutting costs, which will be reflected in the reduction of vehicle insurance prices in the future.

Najm’s revenue model in the past was ‘very painful’, as revenue was generated in favor of the company from every traffic accident.

With the support of the Saudi Central Bank (SAMA), the insurer managed to change the mechanism of revenue generation from accidents to the collection of insurance policies issued by insurance companies.

Najm’s revenue reached SAR 750 million in 2021, compared to around SAR 300 million in 2018, the CEO said, noting that the company seeks to keep profit margins at 7% annually, a relatively reasonable level, to boost the development business. 

Further, Al Sulaiman stressed the compatibility of the new revenue model with Najm's goals to improve traffic safety, unlike the previous model that was not concerned with reducing accidents. He indicated that the insurer currently generates revenue from the insurance sector and seeks to increase its sales.

Accident revenues constituted more than 95% of the company’s revenues in the past, the top executive said, pointing to the development and diversification of the firm’s vehicle products in cooperation with executive authorities and some ministries.

This led to a decrease in the company’s dependence on accident revenues to below the current 70%.

All insurance companies covering the vehicles sector, whose number ranges between 25 to 27, have stakes in Najm, Al Sulaiman said, stressing that there will be no exit from these companies.

The shares of insurance companies in Najm were equal in the beginning, and with the mergers and acquisitions in the sector, some companies began to double their shares.

Al-Sulaiman said the company invests in its subsidiary, Manafeth, which will issue insurance policies for those coming from outside the Kingdom, whether by land or sea.

Commenting on Najm’s listing, the CEO stressed that the company is ready for listing in the Saudi market in terms of governance, structuring and fulfillment of requirements for effective listing. However, the decision is pending the approval of the board and shareholders.