Saudi Arabia's newly liberalised insurance market is expected to grow from the current level of $1.5 billion (Dh5.5bn) per year to $8bn (Dh29.3bn) within 10 years.
An insurance summit in Jeddah that begins today is expected to be attended by more than 300 insurance professionals, regulators and key industry players.
The Saudi Arabian Monetary Agency recently reported the insurance market grew 35 per cent in 2006 over the previous year's level. Gross premiums rose to $1.8bn (Dh6.6bn) from $1.3bn (Dh4.7bn) in 2005.
General insurance premiums, which represented 65 per cent of the market, rose by 25 per cent to $1.2bn (Dh4.4bn) in 2006 compared with $959 million (Dh3.5bn) in the previous year.
Protection and savings insurance premiums, which represented a mere three per cent of the market, went up by almost 16 per cent to $59m (Dh216m) in 2006 compared with $51m (Dh188m) in 2005.
But it is health insurance that is attracting the most attention - representing 32 per cent of the insurance market. This segment saw premiums increase by 57 per cent to $589m (Dh2.1bn) in 2006 compared with $375m (Dh1.3bn) in 2005. This growth is mainly driven by the decision to make health insurance mandatory for all expatriate workers in Saudi Arabia, coupled with favourable economic conditions.
New laws require the kingdom's seven million expatriates to prove that health insurance cover is provided to them by their employers.The first phase demanded compliance from companies with more than 500 employees by July this year. Remaining firms have until March 2008 to ensure their workers are covered.
The opening up of Saudi Arabia's insurance sectors has injected hundreds of millions of dollars into the market with more to come through new company licensing and public offerings.
All insurance companies operating in the Saudi market must obtain a licence by March 2008 or cease operations. The capital requirements for gaining a licence are $26.67m (Dh97m) for insurers and $53.33m (Dh195m) for reinsurers with an additional 10 per cent statutory deposit. Companies are also obliged to float at least 25 per cent of their shares on the Saudi stock market and meet other regulatory requirements before receiving a licence. At present, 18 companies have been licensed, with 24 more expecting to be granted approval.
"The new laws have led many in the industry to forecast excellent growth in the non-life sector in Saudi Arabia with predictions of $4bn (Dh14.6m) growth by 2009," said Deep Marwaha, Senior Conference Manager at IIR Middle East, organisers of the insurance summit "Within this high-growth market, the landscape is shifting dramatically," said Marwaha. "The summit aims to ensure that key players keep abreast of new developments in what is a breakneck business environment." As an adjunct to the summit there will be a workshop on the principles of Islamic insurance, including takaful structures and Shariah compliance.
By Emirates Today Staff
© Emirates Today 2007
