Tuesday 21, March 2017 by Georgina Enzer

Saudi insurance growth modest in 2016: A.M. Best

Growth for Saudi insurers was modest in 2016, at only one per cent, according to  report by A.M. Best, based on analysis of 33 Saudi insurance providers. Additionally, many of those insurers, as well as others, earned a profit in 2016 compared with 2015.

“One of the biggest headline numbers is the improvement in overall profitability,” said Salman Siddiqui, senior financial analyst, A.M. Best. “The overall profitability for the Saudi market improved to 2.5 billion riyals in 2016 from about a billion riyals in 2015. What is also very important to note is that the number of companies making a profit has increased. In 2015, only 19 out of the 33 companies made a profit, as compared to 2016 where 27 out of 33 did.”

Siddiqui believes one of the biggest drivers of this improvement is underwriting discipline. He said that, “the majority of profits are coming from the core insurance operations of these companies rather than gains and losses made from investment activities. As a result, insurance profits have increased to about SAR 1.7 billion from about SAR 600 million.”

Looking forward, Siddiqui sees growth as being a key concern. Although, growth was modest in 2016, he believes there are avenues available for companies to look for growth.

“The Saudi insurance market, as far as motor is concerned, is considered largely uninsured. An estimated 55 per cent of vehicles in the country are uninsured. This represents a large and potentially untapped market for insurance companies.”

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