Insurance industry and the promotion of financial stability

By Mohammed Hassan Mohammed Al-Naimi

In recent years, the insurance sector in the kingdom of Saudi Arabia has witnessed great progress, as it has become an important role in supporting the local economy and enhancing the financial stability of individuals and companies, so the insurance sector is considered one of the most important elements in the economic structure, because it provides financial protection against various risks, and enhances confidence in business and investments.

The figures speak for themselves, according to the latest report of the Insurance Authority, the insurance sector in the third quarter of 2023 witnessed a growth of about 14.6% to total written premiums of 14.9 billion riyals compared to 13 billion riyals during the same quarter of the previous year, where vehicle insurance, health insurance and property insurance witnessed a significant increase in total written premiums, and the report also showed an increase in the percentage of the insurance sector of non-oil GDP to reach 2.2% during the third quarter of 2023, compared to 2.1% during the same quarter from the year 2022, as a result of the noticeable increase in the total premiums written.

All these figures prove how important the sector is to the national economy, especially as it provides a wide range of services that help individuals and companies manage financial risks and plan for the future with greater confidence.

insurance policies provide protection from various risks, such as accidents, illness, death, and natural disasters. insurance programs also ensure that individuals and families receive the necessary health care and social support, and support workers ‘ compensation in times of crisis.

Simply put, the insurance industry in general relies on the distribution of these risks to a large group of policyholders, which reduces the financial burden on any individual or company, and what allows companies to work with greater certainty, because they know that they are financially protected in the event of unexpected losses, in addition, insurance companies also operate in the reinsurance markets, which increases the distribution of risks, and ensures the overall stability of the industry.

The presence of an active insurance sector promotes increased confidence in business and investments, when investors know that there is insurance coverage that protects their assets and projects from possible risks, they become more willing to invest and expand in business.

The rapid growth of the sector contributes to the injection of multiple job opportunities annually in the labor market in areas such as marketing, sales, Financial Analysis, Customer Services, and administrative functions, which contributes to enhancing the growth of the economy.

The insurance sector also enhances the capacity of other sectors of the economy, such as banks, industries, goods and services, by providing insurance for potential risks and ensuring business continuity.

Finally, the insurance sector is one of the main pillars of the national economy, as it contributes to enhancing financial stability, stimulating investment, providing job opportunities, supporting innovation and technical development, and contributes to a large extent to sustainable economic growth.