Interview: Othman AlKassabi

What is the projected outlook for the insurance industry in Saudi Arabia?

OTHMAN ALKASSABI: The Saudi insurance industry has emerged as one of the fastest-growing markets in the world. Within this context, digital transformation has gained momentum, yet underscores the need for cybersecurity and data privacy infrastructure to protect sensitive customer information. Moreover, firms will have to bolster their capacity for underwriting and claims handling, while product innovation and improved communication on the benefits of insurance protection are expected to help increase customer awareness and penetration.

The launch of mega-projects in the Kingdom is set to impact all sectors, including insurance. The country is taking steps to improve the regulatory environment to attract foreign investment, as well as adopt digital technologies and data analytics to help companies improve efficiency and customer service. The implemented policies are incentivising players to modernise operations, enabling them to capitalise on new opportunities, while mandatory coverage policies drive demand.

How are insurance companies adapting to emerging market segments and evolving demand patterns?

ALKASSABI: Vision 2030 presents potential for growth in new economic sectors and segments. The target of increasing the GDP contribution of small enterprises from 20% to 35% has created a conducive environment for insurers, as significant growth is expected in this segment. The development of infrastructure projects and mega-projects in civil aviation, airports and renewable energy promises to positively impact the insurance sector, particularly the property and casualty segment.

There are also new opportunities arising from the expansion of health care coverage to new segments. As of today there are more than 3m uninsured workers and the contribution of the private sector to GDP is on the rise. As new employees enter the private sector, they are automatically enrolled in compulsory health insurance, enabling private health insurers to serve as third-party administrators and expand into untapped segments. While the government covers essential benefits, private insurers can also leverage the existing base of 23m insured individuals by offering supplementary products.

The industry is under growing pressure to embrace digital technologies, enabling enhanced customer engagement and streamlined operations. The Covid-19 pandemic accelerated this shift, with customers increasingly seeking contactless interactions with providers. Embracing digital advancements offers insurers a favourable position to provide self-service options through mobile apps and online platforms. While digitisation optimises workflows and reduces costs, it also requires significant investment and a focus on risk management in line with regulatory guidelines.

In what ways does the regulatory framework for the industry influence insurance penetration, fraud mitigation and risk management?

ALKASSABI: The regulation of the insurance market in Saudi Arabia started in 2003 with the issuance of the Law on Supervision of Cooperative Insurance Companies. The central bank is taking an active role in the industry, helping drive market maturity.

The regulatory framework is pivotal in fostering insurance penetration, mitigating fraud and enhancing risk management. Licensing and solvency requirements ensure that insurers maintain financial stability, instilling confidence in policyholders and driving greater insurance participation. Additionally, regulatory oversight and compliance measures help in detecting and preventing fraudulent activities, safeguarding both the interests of the insured and the industry’s integrity.

Furthermore, the regulatory framework mandates risk management guidelines that promote comprehensive risk assessment. This enables insurers to adopt appropriate strategies, strengthen resilience and effectively protect policyholders against unforeseen events.