The Saudi insurance market is going through a structural evolution with the introduction of stronger regulations, aided by a welcome shift towards the right level of technical pricing, according to Mr Sanjay Jain, MENA Insurance Leader at the international professional services firm EY.
Even though the decline in oil prices has introduced new vulnerabilities, three trends over the long term – rapid urbanisation, growth in the middle class, and the use of mobile technologies – could potentially lead to overall faster growth for insurers, he said. He added that regulatory enforcement to eradicate fraud, corruption and other abuses will also be critical for the growth of the sector, as will enhanced efforts towards educating consumers, reported Saudi Gazette.
Mr Sanjay was speaking at the EY Jeddah Insurance Seminar during which participants discussed the opportunities and challenges facing the Saudi insurance industry.
The insurance market in the Kingdom will find new opportunities for growth through the state’s National Transformation Plan 2020 and Vision 2030, which was unveiled last year, while simultaneously balancing business and profitability challenges, according to EY.
Mr Ahmed Reda, Jeddah Office Managing Partner at EY Saudi Arabia, said that new insurance regulations that are being introduced may cause some initial challenges in the insurance sector upon implementation. “But we expect to also see some real opportunities develop as more companies adjust their financial practices to uphold international and local standards,” he said.
At the Jeddah seminar, EY experts discussed the financial reporting implications of the new IFRS regulations on Saudi insurers, that are expected to affect both the assets and liabilities on their balance sheets. The experts emphasised the need for changes to be analysed ahead of implementation, taking into account interdependencies, differing timelines and alignment of business synergies.