As the world emerges from the slowdown enforced by the pandemic, Saudi Arabia is focused on opening up like never before – and this could have a series of profound impacts on the insurance sector. Whether the insurance sector is ready for the uptick in business that could be coming its way is another question.
As has been widely reported, the kingdom’s Vision 2030 economic plan is predicated on the nation diversifying its economy away from hydrocarbons and into value-added services such as tourism.
Saudi’s Ministry of Investment has indicated that 3.6m tourists visited the kingdom during the second quarter of 2022 – while visitors reportedly spent $7.19bn during the first six months of last year. Indeed, it has been reported that Saudi hopes to become a top-five global destination by 2030, as its rulers open up the country to foreign tourism and investment.
For the insurance sector to keep pace with this, given its present level of manpower could be a challenge unless there is a focus on the smart use of insurance technology as well as a concerted hiring spree.
Expertise in everything for standard travel insurance to health – and encompassing motor, public liability insurance and much more will be required.
The first phase of the Red Seas luxury ecotourism destination is earmarked to be ready to accept overseas tourists this year complete with new hotels and a new airport. This development is vast – over 28,000 square kilometres of land including an archipelago of more than 90 islands – which will offer the usual range of construction-related insurance opportunities for smart carriers.
While much of Saudi’s pitch for international travellers is centred around its vast heritage – and indeed it recently announced that it is slated to host the 2023 Unesco World Heritage Committee in Riyadh – the kingdom also has eyes on the future.
The nation’s Neom development promises the world’s first cognitive, smart city. Oxagon, a research and innovation district, is one of the hubs being developed in Neom while the entire region is forecast to be powered by renewable energy sources, part of Saudi Arabia’s Vision 2030.
Oxagon is described as “bringing together state-of-the-art approaches of industry 4.0 and the circular economy – to create factories of the future for products of the future”. For insurers and reinsurers alike this is destined to be an entirely new source of business that will not cannibalise its existing customer base – with opportunities in its port, supply chain and much more.
While it is easy for oil-rich states to plan big – and sometimes fail to deliver – already the kingdom’s efforts to grow the commercial base of the nation are bearing fruit.
The kingdom was recently hailed as a bright spot in hard times for the global economy by IMF managing director Kristalina Georgieva. “We look at the high growth rates of Saudi Arabia with gratitude … also because we need that for the regional and the world economy,” she said.
She also said she was, “incredibly impressed by the progress” the country had made in implementing the Vision 2030 programme.
The opportunities abound for all business sectors – and that can only be good news for the wide variety of insurers already operating there. The growth phase could last a decade or more – but the advantage for early movers would be hard to overestimate.
Paul McNamara
Editorial director
Middle East Insurance Review