Global foreign insurance companies have been urged to consider and explore the Saudi market for their expansion strategies in the region.
Mr Basil M.K. Al-Ghalayini, chairman and CEO of the investment house BMG Financial Group, said in an article he wrote in Arab News, said that global foreign insurers with their experiences in similar markets can turn challenges in the Saudi Arabian market into opportunities and benefit from the potential growth in the Saudi market.
He said, “Such companies would have two choices: Either apply to SAMA (Saudi Arabian Monetary Authority) for a new licence or operate via the acquisition of a local one. For obvious reasons, not to mention SAMA’s preference, the latter is advisable.”
Currently, SAMA is encouraging M&As in the insurance sector to have stronger insurers.
Mr Al-Ghalayini said that more than a decade ago, SAMA approved a new insurance company almost every other month, followed by an approval by CMA for listing. He added, “I do not think this unique phenomenon will ever be repeated in the Saudi market or any other capital market.”
He said that those years (which were around the mid-2000s) very quickly created an overcrowded insurance sector, but with obvious challenges at the start, including low capital, lack of awareness by consumers, scarcity of experienced or even qualified human capital, price wars, etc.
Still, there is huge potential in the Saudi insurance sector. Among other plus factors, the kingdom has a young population, one of the largest in the Middle East.