The Kingdom of Saudi Arabia's insurance industry expansion is closely tied to its Vision 2030's initiatives, including mandatory motor insurance and bolstered social welfare systems, which have significantly increased the demand for insurance products, according to a press release on Zawya.
InsurTech innovations are also modernising the industry, enhancing customer experience and accessibility. Infrastructure projects under Vision 2030 further create opportunities in health, life and property insurance.
In 3Q2024, revenue surged by 16.9% year-on-year, with medical insurance leading at a 13.6% growth due to mandatory coverage. Motor insurance revenues grew 22.7%, driven by new vehicle registrations, while property and casualty insurance recorded a 20.4% increase, reflecting a vibrant industrial sector.
“Saudi Arabia’s insurance industry is at the forefront of the Kingdom’s economic transformation, aligning with Vision 2030’s ambition to diversify the economy,” said KPMG in Saudi Arabia partner, head of financial services Ovais Shahab. “The sector’s impressive growth, driven by regulatory reforms, technological innovation and expanding market demand, underscores its critical role in shaping a resilient and diversified financial landscape.”
“The remarkable rise of Saudi Arabia’s insurance industry reflects its adaptability and innovation, from leveraging InsurTech to developing new products,” said KPMG Professional Services partner, insurance lead Salman Chaudhry. “As insurers embrace digital transformation and sustainability, they are not only enhancing customer experience but also addressing emerging risks, positioning the industry for long-term success in a rapidly evolving market.”
Despite its growth, the sector also faces challenges such as price competition, regulatory compliance and geopolitical uncertainties. However, technological advancements are reshaping the landscape. Digital brokers like Tameeni and BCare simplify policy access, while AI-driven innovations optimise claims processing and fraud detection. Usage-based insurance powered by telematics is gaining traction, signalling a shift toward personalised policies.
Regulatory shift post establishment of Insurance Authority is already paving the way for more deeper and relevant reforms, including enhancements in governance, products innovation and reinsurance. The recent implementation of IFRS17 and IFRS9 standards has also brought more transparency and comparability to insurers’ financial performance, as evidenced by a strong 3Q2024 combined ratio of 93.69% and a 25.9% year-on-year increase in net profit before zakat and tax, reaching SAR3.9bn ($1.04bn). The sector’s total assets rose 20% to SAR84.91bn.
The reinsurance sector is thriving under new mandates, requiring insurers to cede 30% of business to local reinsurers by 2025. Health and life insurance are also expanding due to a growing population and increased wellness awareness.
“As Saudi Arabia’s insurance sector continues to evolve, it is well-positioned to play a pivotal role in the Kingdom’s economic transformation. Supported by regulatory foresight, innovation, and Vision 2030’s framework, the industry is set to further its contributions to Saudi Arabia's diversification and growth,” said Mr Shahab.