Saudi Arabia’s general insurance industry is projected to grow from SAR37.5bn (US$10bn) in 2020 to SAR46.4bn (US$12.3bn) in 2025 in terms of gross written premiums, according to GlobalData. The leading data and analytics company notes that the COVID-19 crisis has prompted insurers to develop new products and expand their offerings.
GlobalData has revised Saudi Arabia’s general insurance forecast in the aftermath of the COVID-19 outbreak. As per the latest data, the general insurance industry in Saudi Arabia is expected to grow at a compound annual growth rate (CAGR) of 4.4% over 2020-2025, primarily due to economic recovery after the negative impact of the pandemic.
Anjuli Shrivastav, Insurance Analyst at GlobalData, comments: “The government’s push for economic diversification under its Vision 2030 plan, with an objective to reduce dependency on the oil sector and development of the financial sector, which includes insurance, is expected to benefit the industry over the forecast period.”
Health insurance is the largest segment in Saudi Arabia, accounting for 61% of total premiums in 2020. It is forecasted to grow at a CAGR of 4.5% during 2020-2025, driven by growing consumer awareness during the pandemic.
Ms. Anjuli continues: “The government’s plan to develop its healthcare insurance industry under its five-year ‘Digital Health Strategy 2018 plan’ includes the introduction of telemedicine services, which will boost digitalization and support the industry’s growth.”
Motor insurance is the second largest segment, accounting for 22% of the general insurance business in 2020. The segment is expected to recover in 2021 and grow by 1.4% compared to a 2.8% decline in 2020, driven by an increase in automobiles sales. The segment is forecasted to grow at a CAGR of 3.4% over 2020-2025.
Property Insurance accounted for 11% and is forecasted to grow at a CAGR of 4.9% over 2020-2025. Insurers are launching innovative products to increase its sales. For instance, the construction warranty insurance launched under the Saudi Vision 2030 plan aims to protect the interests of policyholders and real estate developers by providing coverage against the hidden defects after the construction has been completed.
Ms. Anjuli concludes: “Insurers developing new products and expanding their offerings, combined with increasing consumer awareness and digital transformation, will support the growth of Saudi Arabia’s general insurance industry to 2025.”
