Revenue generated by the motor insurance branch is expected to outpace the growth of Saudi Arabia's overall insurance market due to ongoing efforts to reduce the number of uninsured vehicles, according to a Standard & Poor's (S&P) analyst. The overall market is expected to grow by 15-20% in 2024.
The analyst, Mr Mario Shukr, told the newspaper Asharq Al-Awsat that motor insurance in Saudi Arabia contributed about SAR12bn ($3.2bn) in 2023, or 21% of total insurance market revenue, increasing significantly by 38% during the previous year compared to 2022. Total insurance market revenue rose by 27% to SAR57bn in 2023.
Mr Shukr says that this growth was due to several factors, including price adjustments for businesses that were incurring losses; the Saudi authorities’ launch of a campaign to reduce the number of uninsured vehicles in the Kingdom, which led to an increase in insurance premium income; and an increase in demand for vehicle insurance, including from the rental business.
He believes that after two years of significant operating losses in 2021 and 2022, the vehicle insurance sector performed well in 2023, and he expects satisfactory performance in 2024 thanks to reasonable prices and strong growth.
He added, “One of the main challenges is the potential for increased competition in Saudi Arabia, which could push vehicle insurance rates down again, thus negatively impacting operational performance in 2025. Furthermore, given the increasing costs regionally and internationally, controlling costs could be a challenge for insurers.”