5% increase in insurance premiums, with the support of new programs and higher prices

S&P Global credit ratings agency (Standard & Poor’s) expected an increase in insurance premiums by 5% during the current year in the Saudi market, with the support of the Hajj and Umrah medical insurance program, the underlying defects insurance system, the increase in vehicle insurance, and the price increase. Entitled “Insurance Companies in the Gulf Cooperation Council Countries in 2021: Strong Capital Supports Credit Quality,” its insurance ratings for insurance companies should remain broadly stable during 2021, as a result of strong capital reserves, despite the ensuing continuing economic uncertainty. On the Covid-19 pandemic, the agency added that the mandatory medical coverage in the Kingdom contributed to supporting the growth of total premiums in recent years, referring to the sector’s acquisition of 52% of the market. It is estimated that total insurance premiums will increase by 3% – 5% in 2020, against the background of high rates of vehicle insurance and reinsurance. Companies in the sector, and companies may record a slight decrease in profitability during 2021, due to unstable economic conditions and levels of natural claims, and the combined percentage (loss and expenditures) may reach 97% in 2021 compared to 95% in 2020. The profits of insurance companies in the first half of last year exceeded 1.2 billion riyals compared to 754 million riyals in the same period in 2019. Medical insurance accounts for 52% of the market, while the share of auto insurance reaches 24%.

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