Saudi Arabia’s insurance sector is set to remain resilient in 2025, with expected growth in top-line revenue between 10 percent and 15 percent, according to a new analysis.

In its latest report, credit rating agency S&P Global revealed that the net profit of insurance companies in the Kingdom grew by 17 percent in Q3 2024, compared to the same period in 2023.

The country’s insurance industry is projected to expand at a compound annual growth rate of 5.2 percent through 2028, with its market size expected to reach SR83.7 billion ($22.28 billion), according to data analytics firm GlobalData.

The growth is attributed primarily to the health and motor insurance sectors, which are expected to contribute 86 percent of total gross written premiums.

“S&P expects its ratings on Saudi insurers to remain stable in 2025, consistent with the stable outlook for all rated insurers in the Kingdom,” the US-based credit agency stated.

The report highlighted that larger players are capturing an increasing share of net profits in the Saudi market, while smaller insurers are experiencing a decline in profitability.

“The largest insurers, Bupa and Tawuniya, now account for more than 50 percent of the market’s insurance revenue in Q3 2024,” S&P Global noted. The top five insurers together generated nearly three quarters of the market’s total revenue in Q3 2024, an increase of approximately 1 percent compared to the same period in 2023.

As competition intensifies, these five major players now account for around 80 percent of total profits, leaving the remaining 21 insurers to share just 20 percent of the profits.

The report also pointed out that medical and motor insurance accounted for over 80 percent of total insurance revenue in Q3 2024. However, motor premiums saw a slight decline of 2.5 percent compared to Q3 2023, amid growing price competition.

Despite this, the report indicates that the overall penetration of insurance in Saudi Arabia continues to rise, though it remains relatively low compared to other markets.

S&P Global’s August report highlighted that Saudi Arabia is expected to drive growth in the Gulf Cooperation Council region’s insurance sector, particularly through the introduction of mandatory medical coverage and efforts to reduce the number of uninsured vehicles.

These measures are expected to create additional demand for insurance and generate higher premium income.

“Insurance penetration in the Kingdom is expected to increase, driven by the market’s strong growth potential. When compared to non-oil GDP, the depth of the insurance market is becoming more apparent,” S&P Global concluded in its latest outlook.

According to data compiled by Arab News from Bloomberg, Saudi Arabia’s insurance sector showed a strong performance in the first half of 2024, with earnings rising by 25 percent, reaching SR2.2 billion, compared to the same period in 2023.

Arabnews.com