News Middle East12 May 2022

Saudi Arabia:Motor premium volume in 2021 hits 7-year low

| 12 May 2022

Written premiums in vehicle insurance business in Saudi Arabia amounted to about SAR8.16bn ($2.18bn) in 2021, 2.3% or SAR195.5m lower compared to about SAR8.36bn in 2020.

According to data compiled by the research unit of the newspaper Al-Eqtisadiah, based on releases by the Saudi Central Bank (SAMA) and financial statements of insurance companies, the 2021 written premiums in motor insurance were the lowest in seven years, having fallen for the fifth year in a row.

The decline in premiums follows in the wake of regulatory efforts to improve pricing fairness and efficiency, most notably by offering discounts to claim-free policyholders, as well as adopting controls over comprehensive insurance on vehicles on financial leases to individuals.

On the other hand, the number of motor insurance policies hit a record level in 2021, exceeding 6m for the first time, according to available data since 2009. 

Average premium

According to the data, the average cost of a vehicle insurance policy has declined for the fifth year in a row, i.e. since 2017, when the industry regulator directed insurance companies to provide a discount to claim-free motor policyholders.

The average motor insurance premium last year amounted to SAR1,350, compared to SAR1,440 in 2020, while the 2016 average was the highest at SAR3,100.

Mr Adel Abdulaziz Al-Essa, a spokesman for Saudi Arabia's insurance industry indicated in a previous interview with Al-Eqtisadiah that the proportion of insured vehicles on the road in Saudi Arabia is not more than 50% of the total number of vehicles in the kingdom, although motor third-party liability insurance is mandatory.

Motor insurance is the second-largest class of insurance in Saudi Arabia, ranking behind health insurance. Motor business contributed 19.4% to the overall insurance market in Saudi Arabia last year.

 


 

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