Authorities in Saudi Arabia estimate close to 2.5 million citizens of the kingdom work in the private sector without any medical coverage.
The insurance industry in Saudi Arabia, which experienced sharp growth in net income last year, should see even further growth in 2017, showed a new report released this week.
However, enforcement of compulsory coverage is key to the growth of the industry, stressed the report.
Saudi Arabia has almost 20 million citizens and another 10 million foreign nationals with dependents, making the possibility of insurance buyers still very high.
However, authorities estimate approximately 2.5 million Saudi citizens work in its private sector without medical coverage from employers, which is a breach of government regulations.
Reports have also suggested that close to 870,000 foreign nationals along with their dependents might also be lacking medical coverage that employers are required to provide.
The figure does not include 1.9 million domestic staff who are foreign nationals that Saudi families employ. Saudis are still not required to cover domestic help with medical insurance.
Close to 55% of all vehicles that currently are on roads in Saudi Arabia are not insured, which also is illegal. A police crackdown could help to contribute to a surge in growth in vehicle insurance premiums stated the report.
In 2016, the insurance industry in Saudi Arabia went through a period of slow growth at the top line, with gross premiums at year end across every line increasing by only 0.5% to SAR35.7 billion.
At the bottom line, the insurance sector’s overall net income in 2016 increased by 139% to end at SAR2.5 billion.
In addition, the report said that the insurance industry in Saudi Arabia had an excessive number of players. At present, 34 insurance companies that are licensed operate in the kingdom. Of the 34, only 2 are closed to writing new business with their trading shares suspended.
The report added that the group was concerned that there were too many companies writing insurance in Saudi Arabia, with too many being too small to effectively compete with peers that were larger.
If there was a consolidation of insurers, their larger size would help to dilute impact of high fixed costs, as well as would likely be beneficial in promoting more competition throughout the entire market.
Over the past ten years, the overall insurance industry in the kingdom has changed from one that was unregulated to the largest health and non-life insurance market in the Gulf Cooperation Council, said the report.