Saudi Arabia’s insurance industry is likely to be buoyant in 2025 with top-line revenue growth ranging between 10 percent and 15 percent, said a report by S&P Global this week. The credit rating agency points out that the industry remains robust as net profits of insurance companies surged 17 percent in Q3 2024 compared to Q3 2023.
The industry’s growth into the future would be quite positive and impressive at a compounded annual growth rate of 5.2 percent into 2028, with Saudi insurance eventually achieving a value of SR83.7 billion, translating into around $22.28 billion, underpinned significantly by both health and motor insurance’s growth. The two are expected to account for 86 percent of total gross written premiums in the coming years.
S&P Global Projects Stable Ratings for Saudi Insurers for 2025; Aligns with Stable Outlook for Kingdom-Operating Insurers. The report notes that only larger market participants will continue to take up bigger pieces of the industry’s net profits, as smaller insurers continue to erode profitability. The biggest players in the sector are Bupa and Tawuniya, which collectively garnered more than 50 percent of the total market revenue by Q3 2024. The five biggest players of the sector together took home nearly 75 percent of the sector’s total revenue, which is 1 percent higher than that of the previous year. Furthermore, the major players now take nearly 80 percent of the total profits in the sector, which has reduced the share of the minor players.
By premium composition, medical and motor insurance remain the two dominant categories, accounting for more than 80 percent of the total revenue in Q3 2024. However, motor premiums declined modestly by 2.5 percent in Q3 2024 from Q3 2023 results amidst high price competition in the category.
Despite challenges in some sub-sectors, overall insurance penetration in Saudi Arabia continues to rise, albeit at a level that is lower than in other markets. According to S&P Global, the Kingdom’s insurance sector will lead growth in the GCC region, mainly on account of new policies, such as mandatory medical coverage and measures to reduce the number of uninsured vehicles. These measures are likely to increase demand for insurance, thus generating extra premium income.
