RIYADH: Insurance companies in Saudi Arabia continued their topline growth momentum in 2022 with aggregate Gross Written Premiums up 26.8 percent year-on-year in the third quarter, according to KPMG.
The global accounting firm puts the Kingdom’s GWP figure at SR39.28 billion ($10.45 billion) for the three months to the end of September, with motor and medical segments topping the growth list with 78 percent and 66 percent respectively.
KPMG forecast a similar trend for the entire year of 2022, as the volatility in the insurance market comparative results, which were visible until the first half of the year, have settled now in terms of the loss ratios and the net profit after zakat and tax.
The industry-wide loss ratios and net profit after zakat and tax stand at 81.79 percent and SR566.12 million as of the end of the third quarter of the year, compared to 81.36 percent and SR 533.84 million over the same period of 2021.
The total assets of the insurance industry stood at SR79.02 billion, up 20 percent compared to the end of 2021.
Equity came in at 4.8 percent higher, at SR19.08 billion.
This represented an annualized return on equity of 3.96 percent in the third quarter of 2022, compared to 3.91 percent as of Dec. 31, 2021.
The annualized return on assets was 0.96 percent, compared to 1.08 percent as of the end of 2021.
Financial reporting in Saudi Arabia is set to change from Jan. 1 2023, as International Financial Reporting Standard 17 is rolled out – a measure that will see insurance contract liabilities calculated as the expected present value of future insurance cash flows with a provision for non-financial risk.
Insurance companies are currently in the implementation and audit phase of the dry runs for the Saudi Central Bank submission, and, according to KPMG, a common challenge for insurance firms is the extraction of data from the current systems for input into IFRS 17 models.
Salman Chaudhry, senior director and insurance lead at KPMG in Saudi Arabia, said: “The results of these dry-runs, related audit observations and learnings will lay the foundation of the quantitative disclosures relating to the impacts of adoption of IFRS 17 and IFRS 9 in the annual financial statements for the year ending December 31, 2022, as required under IAS 8, and the successful implementation of IFRS 17 in the Kingdom from January 1, 2023.”
The boost in the digital transformation in the last two-and-a-half years in the insurance sector has been most visible in the way companies now interact with their customers through digital channels, he added.
“Digitalization has become the norm, with its benefits now widely recognized by the industry. Companies will have to increase their focus on enhancing their cybersecurity and data privacy infrastructure to protect sensitive customer data,” Chaudhry said.