The Saudi Central Bank (SAMA) has issued the 14th annual report on the Saudi Insurance Market. The report highlights the performance of the insurance sector in the Kingdom of Saudi Arabia in 2020 and the sector’s contribution to the Kingdom’s gross domestic product (GDP).
As mentioned in the report, the insurance sector witnessed a growth of circa 2.3% in 2020, with total written premiums reaching SR 38,78 billion. Energy and Accident & Liability insurance classes showed a notable increase in written premiums. The penetration ratio of the sector increased from 1.3% in 2019 to 1.5% in 2020. In terms of the underwriting performance, the overall loss ratio positively improved to reach 77.5%. The net profit (after zakat & tax) for the sector increased by 61.1% compared to the previous year’s corresponding figure, thereby improving the return-on-assets and return-on-equity ratios.
The report noted also that the overall Saudisation ratio increased from 74% in 2019 to 75% in 2020. These positive results came despite the difficult times the sector faced during the Covid-19 pandemic, in which the insurance sector continues to perform effectively by maintaining the safety of clients and facilitating their insurance trading. In addition, its initiative related to extending –in force- motor insurance for individuals for two months free of charge and automatically.
The report also highlights major regulatory and other developments during the year, including the issuance of new Actuarial Work Regulations, the rules governing the activities of insurance aggregators, and standard Policy for Inherent Defects Insurance and Rules for Comprehensive Insurance of Motor Vehicles Financially Leased to Individuals, in addition, the constant progress in IFRS17 implementation journey, as well as the ongoing merger and acquisition in the sector.
The above developments are positive signs of the insurance sector and are consistent with SAMA’s efforts to make the insurance sector larger and a major contributor to the economy while also ensuring policyholder protection and fair pricing of products.