ºÚÁÏÉçÇø

The Saudi Central Bank, SAMA, issued the 16th performance report for the insurance sector for the year 2022.

The sector reported net income of SR689 million ($183.7 million) in 2022, compared to a net loss of SR47 million in 2021. Ìý

The significant improvement in the financial performance is due to the noticeable increase in the size of the insurance portfolio in 2022.

The gross written premiums of the portfolio has grown by 26.9 percent to reach SR53.4 billion in 2022 compared to SR42 billion in 2021. Ìý

Health insurance GWP amounted to SR31.83 billion, accounting for 59.7 percent of the total insurance market, while motor insurance totaled SR10.34 billion, representing 19.4 percent share of the total market GWP in 2022.

Motor and health insurance represented the lion’s share of the total insurance market in 2022, at 79.1 percent.

Property insurance totaled SR2.46 billion, and protection and savings insurance GWP totaled SR1.87 billion, representing 3.5 and 4.6 percent shares of the total insurance market in 2022 respectively.

Insurance penetration to non-oil GDP has increased to 2.09 percent in 2022 from 1.91 percent in 2021, while the insurance density has increased to SR1.564 in 2022 from SR1.2 in 2021, representing a 30.3 percent improvement.

I believe that the insurance market in the Kingdom has room to expand beyond its current capacity, in terms of number and capitalization, by allowing new companies to enter and encourage further mergers and acquisitions.

The ratio of Saudi nationals employed by insurance companies operating in the Kingdom has increased to 79 percent in 2022 compared to 77 percent in 2021. The Saudization ratio for non-managerial positions has increased to 81 percent, while the ratio for managerial positions increased to 69 percent in 2022, compared to 80 and 68 percent, respectively, in 2021.

SAMA has done a great job in enhancing the insurance sector’s performance and its economic impact, while protecting the interests of policyholders and emphasizing fair pricing of insurance products.

Despite the significant improvement in the performance of the insurance sector in 2022, I believe that there are ample opportunities for it to grow further in the years ahead. Ìý

This requires insurance companies to raise public awareness of the importance of the sector, especially in businesses still showing modest or marginal contributions such as property, protection and savings, aviation, marine, engineering, and energy. Ìý

Improving this will ultimately avoid over-concentration in health and motor insurance and improve the insurance penetration ratio and density as well.

I believe that the insurance market in the Kingdom has room to expand beyond its current capacity, in terms of number and capitalization, by allowing new companies to enter and encourage further mergers and acquisitions.

This would avoid concentration of companies controlling the market — eight top insurance firms generated 77.5 percent of the GWP, with 19 companies accounting for the remaining 22.5 percent in 2022.

• Talat Zaki Hafiz is an economist and financial analyst. Twitter: @TalatHafiz

Ìý