Saudi Arabia's insurance industry closed the financial year 2020 on a high note, as a result of the cumulation of government support and persistent efforts of the Saudi Central Bank that enhanced the sector's operational resilience, KPMG in Saudi Arabia, a leading provider of audit, tax and advisory services in the Kingdom, said in their latest Insurance Pulse Saudi Arabia report.
The COVID-19 pandemic triggered disruption in the world economies and most industries, but the government of Saudi Arabia stepped in providing relief to insurers of their obligations and opting to pay for the treatment of all COVID-19 patients including citizens and residents together with two-month extensions in motor policies has impacted favourably on both insurers and policyholders.
“There were no disruptions in business during the last quarter, the extended period of motor insurance has partly been absorbed, and medical treatments are coming back to normal. Accordingly, insurance companies are likely to revisit the need of maintaining adequate premium deficiency reserves. Similarly, 2021 will be a challenging year for the companies to sustain such performance,” said Mr Khalil Al Sedais, office managing partner – Riyadh, at KPMG in Saudi Arabia.
“We have not only observed attempts for 'strategy refresh' but also increased focus on internal capabilities and sustaining margins, in an attempt to foster possible multiple merger and acquisition activities in 2021,” he noted.
Digitally advanced insurers
The insurance industry will be driven by customer experience, data and technology this year, says the report. Customers increasingly prefer to interact digitally with their insurers; hence digitally-advanced insurers will have a more significant advantage.
On the regulatory front, companies will be expected to enhance their resilience to business risks and remain compliant with evolving requirements in protecting policyholders and shareholders' interests.