Saudi insurance sector to reach $8 billion in 10 years |
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JEDDAH - The Saudi Arabian insurance industry, which is currently worth around $1.8 billion annually, is expected to swell to $8 billion within 10 years, according to industry experts.
They say that this is due to regulation and the government plans to extend the mandatory health insurance scheme from expatriates to all Saudi citizens.
The Saudi Arabia Monetary Agency (SAMA)Saudi Arabia Monetary Agency (SAMA)
data show that the insurance market grew 35 per cent in 2006 alone. However it was health insurance that attracted the most attention, representing 32 per cent of the insurance market and increasing by 57 per cent to $589m in 2006, compared to $375m in 2005.
According to SAMASAMA, as of September 2007, there were nine licenced insurance companies in operation in Saudi Arabia. A further 11 insurance companies have been approved by the council of ministers and are awaiting final authorisation, and seven companies have received preliminary approval from SAMASAMA. The regulator is currently studying the applications submitted by another 14 insurance companies.
Ali Al Subaihin, chief executive of Tawuniya, was quoted by Oxford Business Group (OBG) as saying that given the number of players and the current size of the market, mergers and the consolidation of small companies was inevitable.
In information made available to Khaleej Times here on Thursday OBG said that in bid to reduce public health expenditure, Saudi Arabia is in the early stages of negotiating a new health insurance initiative for millions of foreign pilgrims.
"The move is yet another step in the transformation of the kingdom's insurance business," it explained.
OBG explained that covering the religious insurance market is just another step in what has been a major revamping of the Saudi insurance market in recent years. In mid-2003, the government introduced a set of rules to tidy up the industry. Prior to this, the insurance sector had been largely unregulated with many unlicensed players. In 2005 the government called for all insurance companies operating in the Saudi market to apply for licences, which were to be obtained from SAMASAMA by March 2008.
By Correspondent
© Khaleej Times 2008
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