Increased mergers among players in the Saudi insurance industry are expected in the upcoming period, following the establishment of the Insurance Authority (IA), with the aim of forming larger entities in the sector, Adel Al-Eisa, Media Spokesperson for Insurance Companies in Saudi Arabia, told Asharq TV.
Exclusively dedicated to the insurance industry, IA will be an independent entity, reporting directly to the Prime Minister, with all insurance-related legislation undertaken under one roof, Al-Eisa noted.
IA will devote more focus on promoting the sector and resolving all challenges, including mergers, the spokesperson added, pointing out that the insurance sector is currently tackling many problems, most notably the unstable financial results, not to mention that the sector’s profitability is not on par with global markets.
The transfer of powers to IA will take six to seven months, after which the actual work will begin to develop the sector and increase its contribution to the non-oil GDP, with an aim to exceed 4% by 2030.
Although the insurance sector operates well, it does not reflect the Kingdom's prosperous economic status quo. Therefore, it needs a great deal of development efforts, especially with regard to providing the necessary support and promoting the employees’ skills and knowledge, alongside overseeing insurance companies. “Our ambition in this area goes much further,” Al-Eisa affirmed.
The sector encompasses more than 200 companies. In addition to insurance firms, this includes all liberal professions operating in the industry, such as insurance brokers and agents.
New markets and innovative insurance products should be created and introduced to the Saudi insurance market to enhance competition. This will, in turn, promote the market, especially with regard to developing after-sales services, the Spokesperson noted, stressing that operations are currently concentrated in health and auto insurances.
The Saudi Cabinet has recently approved the establishment of IA, with an aim to regulate, oversee and control the Kingdom’s insurance sector, Argaam earlier reported.
Moreover, IA aims at supporting and optimizing the sector, outreaching insurance awareness, protecting the rights of policyholders and beneficiaries, and maintaining the industry’s stability. It will also contribute to the Kingdom’s economic stability, strengthen and develop its insurance market, and consolidate the principles of the insurance contractual relationship.
Source : Argaam