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Arab News
10-06-2025
- Business
- Arab News
Saudi insurance market mergers to accelerate amid regulatory push: Fitch
RIYADH: Saudi Arabia's insurance sector is headed for a wave of consolidation as tougher capital rules and fierce price competition squeeze smaller players, Fitch Ratings said in a new report. The agency expects mergers and acquisitions to accelerate as many insurers struggle to meet new capital requirements or remain profitable amid intense competition and rising costs. The shakeout comes as the newly established Saudi Insurance Authority, which took over from the Saudi Central Bank and the Council of Health Insurance in November 2023, steps up efforts to stabilize and modernize the market in line with Vision 2030. Several smaller insurers are already in talks with larger rivals as they look for ways to shore up their capital positions and ensure long-term survival. 'These measures will be credit positive for the sector in the long term,' Fitch said. 'However, they will increase insurers' regulatory compliance costs, particularly during implementation, adding to pressure on profitability in the short term.' Growth, but thin margins The findings come amid a period of rapid change in the Kingdom's insurance sector. Even with tighter regulations and competitive pressures, the industry remains a vital pillar of the Saudi economy, covering everything from health and motor to property and mega-project risks. Despite these challenges, the insurance sector is still growing. According to KPMG's 'Saudi Arabia Insurance Overview 2025,' total revenue rose 16.9 percent year on year in the third quarter of 2024, driven by a boom in compulsory medical cover, increased motor vehicle activity, and the Kingdom's property development surge. Health insurance, which accounts for roughly 60 percent of the market, saw revenue climb 13.6 percent in the third quarter alone, thanks to mandatory employee cover. Motor insurance premiums also rose over 20 percent amid a robust auto market, while property and casualty insurance posted 20 percent growth driven by large-scale construction projects. Profitability remains a sticking point, however. Health insurance margins have been hurt by medical inflation — the rising costs of medical goods and services — which has pushed up claims payouts even as price competition remains fierce. Arab News has previously reported on how medical inflation, fueled by technological advances, labor costs, and changing health needs, makes it difficult for insurers to improve their combined ratios. Fitch noted that of the 10 largest insurers, six made an underwriting profit in the first quarter of 2025, but several did so only marginally. Four of the top 10 reported underwriting losses, showing just how challenging the environment remains for even the biggest players While property, casualty and life insurance offerings remain generally profitable, medical coverage has weaker margins except at the largest insurers, according to Fitch. Motor insurance, the second-largest segment, continues to face aggressive pricing challenges, particularly for compulsory third-party coverage. A significant regulatory shift is also underway. Starting from January, insurers must now cede 30 percent of their reinsurance to local firms. This move is designed to bolster domestic reinsurance capacity, but it may temporarily raise counterparty risks for insurers since local reinsurers typically have thinner capital bases. Over time, however, the quota might help local reinsurers build scale and improve risk management, supporting a more resilient market that keeps premium income and jobs within the Kingdom. Fitch sees consolidation as inevitable — and ultimately healthy — for the sector. As competition intensifies and regulators raise the bar, many smaller players will likely seek mergers or alliances to survive. This, the agency says, should create a more stable and competitive insurance industry capable of supporting Saudi Arabia's Vision 2030 transformation.
Yahoo
27-05-2025
- Business
- Yahoo
Saudi Insurance Authority revokes licences of several insurance companies
The Saudi Insurance Authority (IA) has taken action to revoke the licences of 28 insurance and brokerage companies. This move is part of a broader strategy to stabilise and improve the performance and credibility of the insurance sector in the country. According to a Saudi Gazette report, these decisions are grounded in the Cooperative Insurance Companies Control Law and other relevant regulations. The revocations are the culmination of a series of corrective measures that began on 28 August 2024. They aim to protect the rights of insured individuals and beneficiaries while promoting financial stability within the sector. The companies affected by these licence revocations include Shire Insurance Agency, Al-Bulurat Insurance Brokerage Services, Al-Sabil Asia Insurance and Reinsurance Brokerage, Al-Aman Insurance and Reinsurance Brokerage, and Future Vision Insurance Brokerage. The list of companies whose licences have been terminated extends to Ahed Saudi Insurance Agency, Al-Rabt Saudi Insurance Brokerage, Aman Gate Insurance Agency, Fursan Insurance Agency, Insurance Management for Insurance Agency, Laval Insurance Brokerage, Panorama Elite Insurance Agency, Saudi Agents Insurance Agents, Saudi Shield Insurance Agency and Takaful Amanah Cooperative Insurance Agency. Eng. Naji Al-Tamimi, CEO of the Insurance Authority, previously indicated that the IA is considering the elimination of health insurance pre-approval systems. These systems are designed to confirm medical necessity and mitigate health risks but have faced criticism for causing delays detrimental to beneficiaries. Al-Tamimi also mentioned that the Authority plans to start publishing performance indicators including the complaint rate in relation to the number of individual health and motor insurance policyholders for each insurance company. Earlier this year, insurance brokerage Willis Towers Watson was granted a licence to operate as a reinsurance broker in Saudi Arabia. "Saudi Insurance Authority revokes licences of several insurance companies" was originally created and published by Life Insurance International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Gulf Business
24-03-2025
- Health
- Gulf Business
Healthcare in Saudi Arabia: Will insurance approvals be eliminated?
Image credit: Getty Images Saudi Arabia is exploring the possibility of scrapping insurance approvals for health insurance services in the country. Read- 'This study aims to eliminate beneficiaries from the process that connects hospitals and healthcare providers to insurance companies operating in the Kingdom, which causes harm to beneficiaries due to delayed approvals,' Eng. Naji Al Tamimi, CEO of the Saudi Insurance Authority, told Al-Riyadh newspaper. Al Tamimi also revealed that the authority received over 400,000 complaints against insurance companies in 2024. The complaint closure rate increased to over 99 per cent, with the satisfaction rate exceeding 95 per cent. However, concerns have been raised about potential excesses and wastage related to healthcare costs, which could negatively impact insurance prices if approvals are scrapped. The authority has assured that careful study will guide the decision, ensuring it is made in the best interests of the beneficiaries. Performance indicators for insurance companies will be published, including the percentage of complaints relative to individual beneficiaries, as well as health and vehicle insurance policies for each company. This initiative is aimed at encouraging companies to improve service quality and enhance customer satisfaction. Bupa Arabia launches initiative to scrap medical approvals Following discussions on scrapping insurance approvals by Saudi authorities, This initiative makes healthcare visits easier for individuals by enhancing the overall experience for insured members in the country. This move by Bupa Arabia is the first of its kind in Saudi Arabia's health insurance sector, designed to provide a seamless, hassle-free healthcare experience and quicker access to medical care. How is it a new concept in the healthcare industry? This initiative will mark a significant milestone in the healthcare industry as it: Eliminates the need for submitting or waiting for prior medical approvals for outpatient treatment at participating hospitals. Simplifies and streamlines the process for members at medical and healthcare facilities.
Argaam
12-02-2025
- Business
- Argaam
IA approves Gulf Union Alahlia, Gulf General merger deal
The Saudi Insurance Authority approved on Feb. 11 the merger deal between Gulf Union Alahlia Cooperative Insurance Co. and Gulf General Cooperative Insurance Co. (GGI). The approval covered the merger deal and other related matters. Two separate statements on Tadawul today indicated that the merger deal is contingent on several outstanding conditions, including approvals from the Capital Market Authority (CMA) and the shareholders of both companies. Both companies stated that they will disclose any material developments on the merger deal in due course. According to Argaam data, both Gulf Union and GGI concluded a binding merger agreement on Dec. 9, 2024. The merger entails transferring all of GGI's rights, obligations, assets, and contracts to Gulf Union Alahlia. In return, Gulf Union Alahlia will issue 22.82 million ordinary shares with a nominal value of SAR 10 per share to GGI's shareholders.
