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News & Events >> Saudi Arabia: Motor and health premiums to rise by 25% next year

Source: eWeekly Middle East | 06 Nov 2014

Successive losses chalked up by insurance companies operating in Saudi Arabia have hit about 50% of capital for several of the insurers, exerting pressure on the sector to turn around the situation by increasing premium rates, according to market players.

Turnaround strategies include introducing increases in premiums by around 25% in the motor and health branches in 2015, or rejecting some businesses, reported Asharq Al Awsat, a pan-Arab daily newspaper. Compulsory motor and medical insurance account for more than two thirds of total gross written premiums.

The highly competitive Saudi insurance market, in which more than 30 insurers operate, had placed pressure on earnings and consequently capital.

A report issued by the authorities indicated that insurance companies faced a range of challenges in 2013. These included a decline in the financial solvency margin for a number of companies. To improve the situation, the Saudi Arabian Monetary Agency (SAMA) directed insurers to base their reserves on actuarial reports, and called on actuaries to adopt proper technical standards when assigning provisions and setting prices. Many insurers strengthened their technical reserves to comply with regulations set by SAMA.

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