Health insurance premiums in Saudi Arabia rose sharply by more than 300% between 2009 and 2024. The average annual premium per person tripled to SAR4,511 ($1,203) by the end of 2024 from SAR1,491 in 2009, with expectations that it would reach SAR9,500 by 2030, according to a study by the Argaam news platform.
The report, based on the study titled "Who Profits from Rising Health Insurance Prices in Saudi Arabia, and Who Pays the Price?", focuses on the main causes of health insurance costs and how this increase impacts the workforce and the local economy as a whole.
Insurance companies attribute the jump in costs to the expansion of medical coverage. The proportion of those with health insurance reached 79% even though, in 1999, the Cooperative Health Insurance Law in Saudi Arabia made health insurance mandatory for private-sector employees, including expatriates.
One interesting finding is that many health insurers generated profits from investments instead of their underwriting operations. This incongruence between rising health insurance premiums and insurance companies' failure to benefit from this increase poses a problem.
Costs
Outlining several reasons for this situation, the report said that the commoditisation of healthcare services and price hikes have contributed to an increase in claims.
Healthcare commoditisation refers to the practice of some healthcare facilities and hospitals treating medical treatment as a commercial product, sometimes recommending it without a clear medical need to generate greater profits. An example of this commoditisation is when a patient visits a healthcare facility for a minor symptom and is prescribed treatment, and is re-contacted for additional follow-up without a clear medical justification.
In addition, regulatory costs are among the reasons for the high cost of insurance. These are fees imposed on insurance companies by regulatory bodies responsible for overseeing the health insurance sector. These are significantly higher than regulatory costs for other types of insurance, such as vehicle insurance.
The fees include those levied by the Insurance Authority and the National Platform for Health Information Exchange Services (NPHIES) accounted for 2.5% of health insurance premiums. The NPHIES platform provides the health information of beneficiaries and allows the sharing of their data with healthcare service providers.