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.
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.