News Middle East24 Feb 2021

Saudi Arabia:2021 GWP growth predicted to grow by up to 5%, profits forecast to dip

| 24 Feb 2021

GWP growth in Saudi Arabia is estimated to be up to 5% in 2021, supported by the Hajj and Umrah Medial Insurance Programme, the Inherent Defects Insurance Scheme, and higher motor insurance penetration, according to S&P Global Ratings.

Mr Emir Mujkic, director - lead analyst, Insurance Ratings at ‎S&P, says in the report “GCC Insurers In 2021 - Robust Capital Supports Credit Quality”, that overall GWP is estimated to have increased by 3%- 5% in 2020, thanks to higher motor and reinsurance rates.

“We also foresee some rate increases in medical insurance this year after a decline in GWP in 2020, since public hospitals will likely start billing insurers for their services,” he says.

Profits

Overall, S&P forecasts a modest decline in profitability in 2021, due to uncertain economic conditions and more normalised claim levels, with the combined ratio at about 97% in 2021 compared with about 95% in 2020.

Following recent merger news, consolidation will likely continue this year, given that roughly one-third of the 30 active primary insurers are still making losses. This could accelerate if, as anticipated, the regulator sets higher minimum capital requirements, requiring companies to raise additional capital.

 

 

 

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