RIYADH: Reaffirming its ongoing efforts to improve the insurance sector, Saudi Central Bank has approved laws to provide fintech firms with the flexibility to operate under an innovative regulatory framework.
The bank, also known as SAMA, approved the insurance financial technology rules after gaining feedback via the National Competitiveness Center’s Public Consultation Platform, according to a press release.
The insurtech rules aim to regulate the underlying business and its operations, assure client protection, and promote fair competition in solution provision and services to support sector stability and growth.
The new rules incorporate the fundamental pillars of the insurance industry such as practitioners’ obligations, clients’ information accuracy, and rules of behavior that protect clients’ rights, compliance, and control.
SAMA said the move is part of its commitment to assisting and facilitating the expansion of the insurance sector, as well as regulating the connection between insurtech companies and clients while protecting the rights of all parties involved.
Saudi Arabia’s insurance sector witnessed a 26.9 percent growth to SR53 billion ($14.1 billion) in 2022, up from a rise of 8.4 percent to SR42 billion in 2021, SAMA’s 16th annual report on the insurance market showed.
Health insurance, which remains the largest line of business, grew at a rate of 26.8 percent during the period.
Protection and saving insurance, on the other hand, fell from 4.1 percent growth in 2021 to 3.5 percent last year, the smallest line of business.
The report also stated that the insurance sector’s contribution to non-oil gross domestic product increased by 0.18 percent to 2.09 percent in 2022.
Earlier this month, SAMA gave Tabby, a buy-now-pay-later platform, the permit to run postpaid payment activity, reflecting its endeavor in supporting the fintech sector.
The new permit also reaffirms SAMA’s commitment to supporting the sector by increasing operational efficiency and encouraging innovative financial solutions to promote inclusivity in Saudi Arabia.
As part of its Vision 2030 economic diversification strategy, the central bank is also working on employing technology in financial services to assist Saudi Arabia’s broader ambitions.
The number of enterprises in the industry is predicted to grow from 82 in 2022 to 230 by 2025, according to the Ministry of Finance’s national fintech strategy.
The plan also aims to boost the fintech sector’s contribution to the GDP to SR4.5 billion and generate nearly 6,000 employment by 2025, as well as increase the share of digital transactions to 70 percent of all financial transactions.