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Cooperative coverage is taking hold, but consolidation is needed
The kingdom follows its own "cooperative” model, which differs from takaful in a number of ways: it does not demand a complete separation of the policyholder and shareholder funds, nor does it compel insurers to invest only in instruments that are sharia compatible.
According to SAMA, 33 insurers are currently licensed to operate in the Saudi market, while a further three have been approved for establishment, this makes for a crowded sector, with intense competition played out largely in the arena of premium prices
| Insurance penetration, 2008-2012 |
| |
2008 |
2009 |
2010 |
2011 |
2012 |
| General Insurance |
0.31% |
0.45% |
0.40% |
0.36% |
0.33% |
| Health inurance |
0.27% |
0.52% |
0.51% |
0.45% |
0.41% |
| P&S insurane |
0.03% |
0.07% |
0.06% |
0.04% |
0.03% |
| Total |
0.92% |
1.03% |
0.97% |
0.86% |
0.78% |
| SOURCE: SAMA Insurance Supervision Department |
Three companies dominate the market in term of gross written premiums, while the remaing players claim less than 5% each. The prominent role of corporate business means that brokers and agents play a larger role in the Saudi insurance industry than in ore developed markets.
| GWPs by line of business, 2008-12 (SR m) |
| |
2008 |
2009 |
2010 |
2011 |
2012 |
| GWPs |
% |
GWPs |
% |
GWPs |
% |
GWPs |
% |
GWPs |
% |
| General insurance |
5520.1 |
50.6 |
6315.3 |
43.2 |
6725.1 |
40.7 |
7890.3 |
42.6 |
8999.9 |
42.5 |
| Health insurance |
4805.2 |
44 |
7292 |
49.9 |
8690.1 |
53.3 |
9708.4 |
52.5 |
11,285.40 |
53.3 |
| P&S insurance |
593.7 |
5.4 |
1002.8 |
6.9 |
972.2 |
6 |
905.1 |
4.9 |
888.5 |
4.2 |
| Total |
10,918.90 |
100 |
14,610.10 |
100 |
16,387.40 |
100 |
18,503.70 |
100 |
21,173.80 |
100 |
| SOURCE: SAMA Insurance Supervision Department |
In terms of GWPs, the expansion of the insurance industry continued in 2013, which saw a sector aggregate of $6.56nb – up 19% on 2012 – but the overall performance of the sector has been negatively affected by a reduction in operational profit posted but many industry participants.
Insurance penetration, measured as a percentage of GDP, remains low, at around 0.8% in 2012.
Nevertheless, per capita expenditure on insurance products has been growing over recent years, rising from $117.30 in 2008 to $193.29 in 2012, largely driven by an increase in health care cover.
The sector regulator has moved to counter the damaging price war by emphasissing the important of proper actuarial pricing, this, it is hoped, will bring about an improvement in underwriting performance in the short to medium term |
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