Saudi Arabia Insurance Report Q4 2011
Includes 3 FREE quarterly updates
Saudi Arabia’s insurers are required to operate according to the principles of cooperative insurance. This means that, collectively, they form the largest shari’a-compliant insurance sector in the world. According to Ernst & Young, Saudi insurers accounted for US$3,896mn of global takaful/shari’a-compliant contributions in 2009. The second largest source was the takaful operators of South East Asia, who received contributions of US$1,486mn; the third largest were the takaful operators of the Gulf Cooperation Council (GCC) countries outside Saudi Arabia. Globally, contributions in 2009 amounted to US$6,875mn.
However, it is the weaknesses of the sector that dominate. The most obvious problem is that social security (or government benevolence) towards locals is so generous that most Saudi households do not need to use life insurance. As noted above, protection products have grown enormously from a miniscule base. However, by any metric, life insurance is – and during the forecast period will almost certainly remain – small. The industry is fragmented, in that Tawuniya – the former state-owned monopoly – is the only company that is writing substantially more than US$1bn in annual premiums, while most of the 30 or so insurers have annual premiums of less than US$150mn. Retention ratios (i.e. net premiums as a percentage of gross premiums) are higher than in other GCC countries, but are still – at 72% or so – quite low. There is a shortage of skilled labour, as companies struggle to meet the official Saudisation ratio (i.e. the percentage of total staff accounted for by locals rather than by expatriates).
The results released by the listed companies in relation to H111 suggest that overall premium growth has accelerated to above 17% in 2011. The larger companies have been selective about the business that they have been writing. Smaller companies (with the exceptions of the local takaful operators) have generally been growing quickly. There are marked differences between companies in terms of the effect of motorrelated claims. A favourable development is that, through H111, most companies achieved significant growth in net investment income – in spite of the volatility in global financial markets.
- The continuing expansion of the Saudi economy should underpin the steady growth of the insurance sector.
- However, the main catalyst for growth in recent years – the rise of compulsory health insurance – is plainly becoming less important than it used to be. This has implications for the global Takaful/shari’a compliant insurance industry.
- Life insurance remains miniscule.
- Most local companies lack scale in a fragmented and not necessarily profitable industry.
Saudi Arabia’s insurers are required to operate according to the principles of cooperative insurance. This means that, collectively, they form the largest shari’a-compliant insurance sector in the world. According to Ernst & Young, Saudi insurers accounted for US$3,896mn of global takaful/shari’a-compliant contributions in 2009. The second largest source was the takaful operators of South East Asia, who received contributions of US$1,486mn; the third largest were the takaful operators of the Gulf Cooperation Council (GCC) countries outside Saudi Arabia. Globally, contributions in 2009 amounted to US$6,875mn.
However, it is the weaknesses of the sector that dominate. The most obvious problem is that social security (or government benevolence) towards locals is so generous that most Saudi households do not need to use life insurance. As noted above, protection products have grown enormously from a miniscule base. However, by any metric, life insurance is – and during the forecast period will almost certainly remain – small. The industry is fragmented, in that Tawuniya – the former state-owned monopoly – is the only company that is writing substantially more than US$1bn in annual premiums, while most of the 30 or so insurers have annual premiums of less than US$150mn. Retention ratios (i.e. net premiums as a percentage of gross premiums) are higher than in other GCC countries, but are still – at 72% or so – quite low. There is a shortage of skilled labour, as companies struggle to meet the official Saudisation ratio (i.e. the percentage of total staff accounted for by locals rather than by expatriates).
The results released by the listed companies in relation to H111 suggest that overall premium growth has accelerated to above 17% in 2011. The larger companies have been selective about the business that they have been writing. Smaller companies (with the exceptions of the local takaful operators) have generally been growing quickly. There are marked differences between companies in terms of the effect of motorrelated claims. A favourable development is that, through H111, most companies achieved significant growth in net investment income – in spite of the volatility in global financial markets.
Contents
Executive SummaryTable: Total Premiums 2008-2015
Key Insights And Key Risks
SWOT Analysis
Saudi Arabia Insurance Industry SWOT
Saudi Arabia Political SWOT
Saudi Arabia Economic SWOT
Saudi Arabia Business Environment SWOT
Life Sector
Middle East Life Sector Overview
Table: Middle East And Africa Life Premiums, 2008-2015 (US$mn)
Saudi Arabia Life Sector Update
Life Industry Forecast Scenario
Table: Total Life Premiums 2008-2015
Growth Drivers And Risk Management Projections
Population
Table: Insurance Key Drivers, Demographics 2008-2015
Non-Life Sector
Middle East Non-Life Sector Overview
Table: Middle East And Africa Non-Life Premiums, 2008-2015 (US$mn)
Saudi Arabia Non-Life Sector Update
Table: Saudi Arabia Gross Written Premiums By Line Of Business, 2006-2010 (SARmn)
Table: Saudi Arabia Growth In Gross Written Premiums By Line Of Business, 2007-2010 (%)
Table: Saudi Arabia Net Written Premiums By Line Of Business, 2006-2010 (SARmn)
Table: Saudi Arabia Growth In Net Written Premiums By Line Of Business, 2007-2010 (%)
Table: Saudi Arabia Retention Ratios By Line Of Business, 2006-2010 (%)
Non-Life Insurance Industry Forecast Scenario
Table: Total Non-Life Premiums 2008-2015
Growth Drivers And Risk Management Projections
Macroeconomic Outlook
Table: Saudi Arabia Economic Activity, 2008-2015
Political Stability Outlook
Table: Middle East And Africa Defence And Security Ratings
Healthcare
Health Insurance
Epidemiology
Table: Insurance Key Drivers, Disability-Adjusted Life Years 2008-2015
Motor
Table: Insurance Key Drivers, Autos 2008-2015
Tourism
Table: Insurance Key Drivers, Tourism – Resident Departures By Destination Region, 2008-2015
Islamic Finance
Table: Takaful And Cooperative Insurance Compared
Insurance Risk/Reward Ratings
Table: Saudi Arabia’s Insurance Risk/Reward Ratings
Table: Middle East And Africa Insurance Risk/Reward Ratings
Competitive Landscape
Competitive Landscape Analysis
Major Players In Saudi Arabia’s Insurance Sector
Table: Ranking Of Companies By Premiums, 2009-2010
Company Profiles
Local Company Profiles
BUPA Arabia
Medgulf
Tawuniya
Regional Company Profiles
Allianz
Arab Insurance Group (ARIG)
Aviva
AXA
Chartis
Generali
HSBC Insurance
MAPFRE
MetLife ALICO
RSA
Zurich Financial Services
BMI Methodology
Insurance Risk/Reward Ratings
Table: Insurance Risk/Reward Indicators And Rationale
Table: Weighting Of Indicators Skip to top