JEDDAH, 1 May 2005 — Saudi Arabia’s insurance market is expected to cross SR15 billion by 2009 as a result of growing demand for medical and car insurance policies, says Ali Abdul Rahman Al-Subaiheen, executive president of the National Company for Cooperative Insurance (NCCI).
He estimated the current market volume at around SR4 billion with car insurance holding the largest share of 32 percent, followed by medical insurance 22 percent, property insurance 17 percent and others 29 percent. He expected that car insurance would grow to SR5 billion and medical insurance to SR6.3 billion within the next four years.
Subaiheen’s statement comes after the Saudi Arabian General Investment Authority (SAGIA) licensed 13 new insurance companies with a total capital of SR2.5 billion. The licensees included well-known insurance companies from Britain, Germany, Switzerland, Japan, India, Holland, the United States, Bahrain, Jordan, Lebanon and France.
The NCCI chief ruled out possibility of accommodating more companies in the market due to poor public awareness on insurance. “This situation will change if the authorities introduce new mandatory insurance policies” like the car insurance,” he explained.
“Saudi insurance market at present contributes only less than one percent of the gross domestic product (GDP) as a result of a fall in per capita spending on insurance to SR150 per year,” Al-Eqtisadiah business daily, a sister publication of Arab News, quoted Subaiheen as saying.
However, he expected that the per capita spending could increase to SR750 per year, thus rising the sector’s contribution to the GDP to three to five percent.
According to Subaiheen, some 100 insurance companies and agents with limited capabilities were operating in the Kingdom. “Now the authorities have licensed several companies having large potentials,” he said, adding that these firms would compete with one another to get maximum share of the untapped market.
He said the newly licensed companies may take time to provide their services and meet growing requirements of car and medical insurance facilities. He said the licensing of new companies would strengthen the market and enhance its credibility. “It will also help end illegal and irresponsible practices in the market,” he added.
Subaiheen believed that the multiplicity of supervising agencies would strengthen the market, but called for more coordination among them.
The Saudi Arabian Monetary Agency (SAMA) sets the rules and regulations for insurance companies while the Health Insurance Council and other agencies monitor their services.
He attributed the delay in implementing the cooperative health insurance scheme on expatriates to lack of licensed insurance companies. Until recently NCCI was the only licensed insurance company in the Kingdom.
“The council’s decision to delay implementation of the scheme was a positive one and was in the interest of all,” Subaiheen said. But some private hospital owners said they had suffered big losses because of the delay.
According to the Health Ministry, the scheme would be introduced on expatriate workers in the middle of this year. The ministry has instructed that any company with a work force of 500 or more expatriates must provide them with medical insurance coverage before the expatriates will be issued an iqama (residence permit).
The scheme would be implemented in three phases. The second phase will involve companies with a non-Saudi work force of 100 to 500 and the third stage companies with a non-Saudi work force of less than 100.
Subaiheen expected mandatory insurance against vocational hazards.
“I also hope that insurance for business shops will increase from the present level of 38 percent,” he said. NCCI recently offered a new insurance policy for the benefit of these shops to compensate them for losses caused by fire, thefts, floods, thunderbolts and others.
The newly licensed 13 companies included the Mediterranean & Gulf Insurance & Reinsurance Co. (MedGulf) with a capital of SR600 million, BUPA Arabia (SR400 million), Saudi United Cooperative Insurance Company, Al-Alamiya Insurance Co., United Cooperative Assurance Co. and Arabian Shield Insurance Co. (all with a capital of SR200 million).
Other license winners are: Saudi-Indian Insurance Company, Tokio Marine & Nichido, Saudi National Insurance Co., AXA Insurance Company, Saab Takaful Company, Saudi-French Insurance Company, and National Takaful Co. (all with a capital of SR100 million).
