Saudi Arabia: Insurance Authority announces shift to RBC regime
Source: Middle East Insurance Review | May 2026
The Insurance Authority (IA) has announced the transition to the mandatory implementation of the Risk-Based Capital (RBC) framework, effective 1 January 2027.
This is a significant step to strengthen the resilience of Saudi Arabia’s insurance sector and deliver on the National Insurance Sector Strategy, said the IA in a statement. The framework will serve as the official solvency regime for insurance and reinsurance companies, replacing the current framework in force. This move aligns with the strategy’s direction toward enhancing the efficiency and sustainability of the sector.
The IA noted that the RBC regime will enable insurers to make more flexible, risk-informed decisions, while ensuring they maintain capital levels commensurate with the nature and scale of the risks they face. This, in turn, enhances confidence in the sector by strengthening insurers’ ability to manage risks effectively and meet their financial obligations toward policyholders and investors. The flexibility offered by the framework will also support greater diversification of insurers’ investment portfolios, contributing to broader economic activity within the financial sector.
The new framework further allows for capital enhancement through the issuance of subordinated debt instruments, providing insurers with additional options to meet capital requirements in line with business growth, while also encouraging increased investor participation in the insurance sector.
The statement emphasised that the RBC framework is aligned with international best practices for capital requirements in the insurance sector, such as the Solvency II regime adopted in Europe, and tailored to reflect the specific characteristics of the Saudi insurance market. M