SAMA: Share of 5 largest insurance companies in Saudi market ‎is declining from 40.7% to 38.2%‎

Saudi Central Bank revealed that the activities in the insurance sector witnessed a slight change by the end of 2022, as the five largest companies in the sector acquired a share of 38.2% of insurance premiums, compared to 40.7% in 2021, while their share of health insurance amounted to 38.2%. 86.3% last year, compared to 85.3% in 2021.

The Central Bank stated in its periodic bulletin that the health insurance activity continued to dominate the insurance sector, acquiring a share of 59.7% of the total written insurance premiums by the end of 2022.

Net claims incurred by insurance companies increased by 21.7% in the past year compared to 2021, to reach 33.3 billion riyals. According to the Central Bank, this increase is due to the increase in vehicle insurance claims by 25.5%, as a result of the great economic recovery after the Corona pandemic and a slight increase in the number of insured vehicles, in addition to the increase in health insurance claims by 22.7%, which can be attributed to regulatory initiatives. To improve health insurance coverage and to resume deferred treatment due to the pandemic

The total profitability of the insurance sector increased, as net income reached 689 million riyals last year, compared to a loss of 47 million riyals in 2022. The return on assets increased by 0.9% and the return on equity by 3.5%. This may be due to the positive profitability results of companies. Major insurance over the past year. Driven by the provision of new insurance products as well as an increase in net written premiums in health insurance by 29.2% and in vehicle insurance by 28.2%.

The rise in interest rates also contributed positively to the income of the insurance sector, as net investment income reached 1.1 billion riyals at the end of last year. A slight decrease from the 2021 record of 1.2 billion riyals. In general, the sector has a conservative investment portfolio, as it keeps the bulk of its investments in deposits with financial institutions and in fixed-income securities.

The Central Bank indicated that it had taken precautionary measures that included a number of requirements to mitigate the risks of investment concentration, such as the requirement that the investment percentage in each investment pool not exceed 50% of the total investment. The requirement that the percentage of investment outside the Kingdom not exceed 20% of the total investment

The total loss rate for all insurance activities reached 83.4% by the end of last year, which is the net claims incurred to the net earned premiums, as it remained unchanged compared to 2021. This stability in the loss rate, despite the increase in net claims incurred, is attributed to An increase of 26.9% in gross written premiums and an increase of 21.7% in net earned premiums, which indicates sound pricing practices for the insurance sector as a whole, with the exception of motor insurance, where the loss rate increased from 82.4% in 2021 to 91.5% in 2021. Last year, driven by intense competition and an increase in the prices of vehicle spare parts, this activity witnessed price corrections that began in the second half of 2022, and its positive impact is expected to appear during 2023.

And the technical insurance reserves achieved an increase of 23.8% for the past year compared to 2021, which reflects the increased demand for insurance, and according to the Central Bank, this increase can be attributed to the increase in the unearned premium reserve by 30.7%. The reserve for incurred but not reported claims increased by 19.5%, and the reserve for outstanding claims increased by 12.9%, with the unallocated loss adjustment expense reserve increasing by 12.8% in the same period.

Likewise, the total insurance premiums written for the sector increased by the end of 2022 by 26.9% compared to 2021, in conjunction with the growth of the non-oil sector, and this increase can be attributed to the effective performance of various insurance activities, led by other insurance activities, which grew by 27.7%. , and vehicle insurance, which increased by 26.8%, in addition to the continued growth of the non-oil sector, which reached 9.2%, and the rise in the average premiums for vehicle insurance policies.