The motor insurance branch in Saudi Arabia fell short of breaking even in the first quarter of 2026, despite the significant increase in policy prices in recent months.
The net combined ratio for motor insurance was around 106.3% in 2022. It dropped to 87.2% in 2023, and remained close to the same level in 2024, before jumping to 107.3% during 2025, reported the newspaper Al Eqtisadiah. This shift means that the branch has moved from profit in motor insurance activity within two years to a loss in 2025. In the first quarter of 2026, the index improved to 102.5%.
But the combined ratio has not yet fallen below the 100% level that represents the breakeven point. This situation continues to exert downward pressure on insurance companies' results, particularly those heavily reliant on motor insurance.
Vehicle insurance premiums rose to a record high of SAR15.59bn in 2025, compared to SAR8.15bn in 2021, meaning they almost doubled in four years. Growth continued in the first quarter of 2026, with premiums reaching approximately SAR5bn, representing a year-on-year increase of nearly 27%.
2025 data show where the pressure came from. The claims ratio rose to 84% in 2025 from 70.4% in 2024. Meanwhile, direct expenses climbed to 22.3% from 16%.
In other words, the problem is the rapidly rising cost of motor insurance. Therefore, restoring profitability depends not only on raising policy prices, but also on reducing claims costs and expenses, and improving risk selection.
As the retention rate in motor insurance reached about 99.1% during 2025, pricing errors or high claims are reflected in the financial results of the insurers.
Data from 2025 show that the market has already begun a phase of price increases. In the fourth quarter, the average price of a third-party liability insurance policy rose by 16.6% compared to the same period in 2024, while the average cost of a claim increased by 3.9% during the year.
The trend continued in the first quarter of 2026, with the average price of third-party insurance rising by 22.9%, compared to 9.8% for comprehensive insurance.