Saudi Arabia’s insurance market, the second largest in the Gulf region by gross written premium (GWP) after the UAE, offers a vibrant and competitive environment. Growth in recent years has been attributed to economic development creating new insurable assets, and new lines of mandatory coverage.

Long-term direction is detailed in the country’s Vision 2030 development plan and targets a growing and maturing sector through consolidation, digitalisation and overall capacity building. Like insurers worldwide who responded to the global Covid-19 pandemic by updating their operations and leveraging insurance technology (insurtech), many Saudi insurance companies have entered a period of rapid digitalisation and modernisation.


As of June 2022 the Kingdom had 29 insurers, takaful (Islamic insurance) providers and reinsurers, as well as 179 brokers and other service providers. In addition to the pandemic’s effect on the economy, in recent years insurance operators have encountered volatility in oil prices, intense competition, and constrained fiscal and business spending.

Insurance penetration fell in 2021 to 1.3%, down from 1.5% in 2020, according to the most recent “Saudi Insurance Market Report” published by the Saudi Central Bank (SAMA). That figure compares with a global average of 7.3%. Saudi Arabia’s rate has risen somewhat inconsistently, and new insurance business has not kept pace with the Kingdom’s expanding GDP. The compound annual growth rate (CAGR) for insurance penetration is relatively low, at -2.7%. The low growth can be partly explained by low levels of demand and awareness among Saudi consumers, although the authorities are taking steps to augment demand-side factors and enhance efficiencies on the supply side.

Conditions are similar in insurance markets across the region, and authorities have long encouraged mergers and acquisitions (M&A) to rebalance the volume of providers with the demand for their services. Several mergers took place in 2021, establishing a trend likely to continue over the coming years.

These developments are partly an outcome of the Financial Sector Development Programme, which was created in 2017 to help achieve the goals outlined in Vision 2030. The aim is to foster diversity in the sector, stimulate savings, develop more financial tools to support economic activity and diversify sources of income. The aims are intended to enhance the performance of the financial services sector, while simultaneously lower systemic risks.

Regulatory moves such as boosting capital requirements and making more types of insurance mandatory should go a long way towards achieving these goals. Additional measures include adopting international standards, such as implementing more rigorous accounting practices to stimulate consolidation and boost sector resiliency. The overall goal is an increase in GWP to 2.4% of non-oil GDP by 2025 and 4.3% by 2030, compared with a baseline-year figure of approximately 1.9% in 2019.

Many industry analysts expect growth. Alpen Capital, a Dubai-based investment bank and advisory firm, projects a CAGR of 3.2% for the Saudi and wider Gulf insurance market to 2026, increasing its value from $26.5bn in 2021 to $31.1bn in 2026. In the Kingdom’s general insurance market, the CAGR is forecast at 4.4% from 2020 to 2025, according to data and analytics firm GlobalData.

Regulation & Oversight 

Insurance is governed by the 2003 Insurance Law. It is offered primarily through a cooperative model seen as similar to the sharia-compliant concept of takaful, and some consider the Kingdom the largest takaful market worldwide. Traditional takaful is also available in the market, but the cooperative model is different because it does not require the full segregation of policyholders’ funds and shareholder funds, investments are not required to conform to sharia principles and a board of Islamic scholars is not needed to oversee sharia compliance.

The General Department of Insurance Control (GDIC) oversees the sector in accordance with the 2003 Insurance Law. SAMA regulation of the health insurance system is carried out in tandem with the Council of Cooperative Health Insurance, which reported 10.4m people as receiving coverage in 2020, including 6.7m expatriates. Investment funds must also heed the relevant rules of the Capital Markets Authority (CMA). The CMA oversees the Saudi Exchange, the country’s stock market. Insurers and reinsurers in the Kingdom are required to retain at least 30% of their underwritten premium and reinsure at least 30% of their totals using a local provider, unless the regulator grants permission for those thresholds to not be met.


GWP rose by 8.4% in 2021 to reach a value of SR42bn ($11.2bn). General insurance accounted for 36.2% of the total, while protection and savings (P&S) insurance made up 4.1%. However, after recording a net income of SR1.4bn ($373.2m) in 2020, companies in aggregate reported a loss of SR47m ($12.5m) in 2021. According to SAMA, direct sales were the main distribution channel that year, accounting for 56.4% of GWP. Brokers captured 38.4% of the market, and agents claimed 5.2%. Commissions paid by insurance companies amounted to SR2.1bn ($559.9m), down from SR2.3bn ($613.2m) in 2020. Meanwhile, health insurance accounted for 52% of the total commissions paid that year, and general insurance comprised 44.8%.

Regulation-driven Growth

The GDIC and SAMA are often credited with driving increases in GWP through their rules and policies, like making more types of insurance compulsory. For example, in 2015 it became mandatory for companies in the private sector to provide their employees with health insurance, and these benefits were expanded in 2017. A unified compulsory motor insurance policy was introduced that same year. Other regulatory priorities include boosting the number of policyholders, increasing employment in the sector, and further consolidation and digitalisation.

Saudi participation in the insurance workforce rose in 2021. That year roughly 68% of the 2257 managerial employees were Saudi nationals, up from 65% in 2020. For non-managerial workers, this figure grew slightly from 79% to 80% over the same period.

The central bank is also seeking to drive participation by adding distribution channels. In 2021 it issued its Rules Governing Bancassurance Activities, which should help fuel GWP growth, according to analysis by Fitch Ratings. SAMA hopes that allowing insurance to be sold through banks will facilitate access to financial services in a one-stop-shop approach for those who prefer it, and anticipates that it will facilitate policy growth in remote areas in particular.

Lines of Business

The Saudi insurance sector is segmented into three main lines of business: health, general and P&S insurance. Health insurance has grown rapidly since its introduction, accounting for 59.7% of total GWP in 2021, up from 58.9% in 2020. The coverage ratio for health insurance schemes was 35% in 2020, up from 33% in 2019 – the baseline year for the Financial Sector Development Programme, which set a goal of pushing the ratio to 45% by 2025. P&S insurance, the smallest market segment, accounted for around 4.1% of total GWP in 2021, up from 3.3% in 2020. Although the least common type of insurance, the jump to 4.1% breaks out of a recent range of around 3%.

The customer profile for P&S insurance is dominated by large enterprises, which accounted for 65.6% of GWP in 2021. Retail insurance accounted for 12.9% of the total, with micro-, small- and medium-sized enterprises accounting for 4%, 6.3% and 11.2%, respectively. This trend of large-scale customers comprising the most significant share will likely continue in the future, given the giga-projects being developed under Vision 2030, which will create new and valuable assets to insure.

However, as awareness of the benefits of insurance remains limited across the Kingdom, insurers can also work to grow the market share – particularly in retail lines of business. To address this, insurance companies and brokers across the Kingdom are working to raise awareness about the importance of coverage and the risks associated with being uninsured.

Motor insurance is the dominant segment within the general category, accounting for 19.4% of GWP in 2021. The category is dominated by intense competition and, therefore, features slim profit margins. It is also notable for its high retention rate, with insurers retaining 94.2% of premium, rather than passing on a greater share of risk to reinsurers.

Growth in GWP is expected to come from enhanced enforcement of existing rules that mandate motor coverage. Motorists have slipped through the cracks in coverage and gone uninsured; however, greater enforcement mechanisms are expected to change that. Absher, an online platform and smartphone app developed by the Ministry of Interior, offers Saudi citizens access to government services such as job applications, pilgrimage permits, renewing driving licences and passports, and checking the validity of motor insurance. This digitalisation process should reduce the number of uninsured vehicles, according to analysis from Fitch, with GlobalData forecasting a CAGR of 3.4% in the domestic motor insurance segment between 2020 and 2025.

Beyond Motor

After motor coverage, the three largest lines of general business in 2021 were property; energy; and fire, accident and liability. Combined GWP in property and fire rose to SR2.3bn ($613.2m) in 2021, up from SR2.1bn ($599.9m) in 2020, accounting for 5.4% of the total. Risk retention in property and fire was 18.5%, with the rest ceded to reinsurers. Accident and liability insurance comprises personal and work-related accidents, employers’ liability, third parties, products, medical services, professionals, theft and burglary, and others. GWP in this category rose to SR1.6bn ($426.6m), up from SR1.4bn ($374.2m) in 2020, equating to a 3.8% market share. The retention ratio was 48.8%.

Energy sector insurance GWP reached SR1.3bn ($346.6m) in 2021, up from SR910.8m ($242.8m) in 2020, for a 3.1% market share. This category boasts one of the lowest risk retention rates, at 1.9% in 2021. Reinsurance is seen as the dominant solution; at their current levels of capitalisation, energy sector setbacks could potentially overwhelm the Kingdom’s insurers. However, once new minimum capital requirements are effectively implemented, the sector may be better able to retain a greater proportion of these risks and, therefore, the premium income that accompanies them.


There is widespread agreement on the need for consolidation, with a large number of insurers and only a handful of them controlling significant market share. In 2021 the eight-largest insurers underwrote 77.2% of GWP, leaving the remaining 22.8% to 21 smaller competitors.

This presents a risk identified in the country’s Vision 2030 economic blueprint, as a fragmented market has greater potential for instability. Vision 2030 envisions a smaller roster of sizeable insurers with the capital required to withstand challenges and handle insuring large projects. In 2021 SAMA signalled a rise in paid-up capital requirements, to be implemented over three years, from a minimum of SR100m ($26.7m) to SR500m ($133.3m). As of 2021 just eight companies were able to meet that standard, signalling change to come.

Insurers could sell more shares in rights issues; however, this is expected to become harder to manage, especially at the scale needed to meet the new standards. Hence, mergers are expected, and some have already begun. In 2020 the first agreement was announced, with general insurance specialist Walaa acquiring Metlife in a stock deal in which Metlife shareholders received 1.52 Walaa shares for each of their Metlife shares. The acquisition allowed Walaa to move into the P&S side of the insurance sector, where it previously had no presence. Walaa, which had SR646m ($172.2m) in paid-up capital as of 2021, has expressed an interest in acquiring smaller rivals.

In another stock-based deal, in December 2020 Gulf Union Cooperative Insurance acquired Al Ahlia Insurance. In December of 2021 the new company, Gulf Union Al Ahlia Cooperative Insurance, announced it was in merger discussions with Al Sagr Insurance. According to Gulf Union, the new company would feature benefits such as sufficient capital to compete in the market, in addition to improving service delivery, boosting financial capabilities, increasing market share and cutting costs. Meanwhile, in 2022 Aljazira Takaful Taawuni acquired Solidarity Saudi Takaful in a similar deal, boosting its paid-up capital from SR350m ($93.3m) to SR470.7m ($125.5m).

SAMA has been clear in its expectation that consolidation should continue in the coming years. Another reason is the regulator’s progress in adopting the International Financial Reporting Standards (IFRS) 17, an accounting process for insurers issues (see analysis). IFRS standards are a global norm allowing foreign investors a degree of familiarity and certainty about financial reporting in a particular market.

Compliance with IFRS 17 permits greater accuracy and transparency in insurance contracts. For companies, this means tightening in-house accounting procedures by upgrading technological systems and human capital, and mandating greater collaboration between the insurer’s various departments. Companies struggling to meet the standards would have a further reason to participate in M&A talks, either to sell their business to a larger company or to combine forces to make the upgrades feasible. Rules for Phase 3 of the implementation were introduced in 2020.


Alongside consolidation, the priority area for development at the corporate level is technology, with digitalisation seen as the answer to multiple challenges. The pace of digitalisation in the insurance sector worldwide sped up with the onset of the global Covid-19 pandemic. Insurers and intermediaries were compelled to find more ways to reach customers with digital options and to use those tools for more of their functions.

SAMA has formally encouraged insurers to digitalise their operations and services, from sales to claims settlements. It also introduced new rules for the insurtech segment to protect customers and enable companies to innovate, while remaining compliant with rules and regulations. Examples include rules for engaging practitioners, licensing and ensuring the accuracy of customer data.

In an example of prioritising the digitalisation process, in 2018 Bupa Arabia for Cooperative Insurance announced the creation of a digital transformation department, one of the first of its kind, to push such reforms through. In 2020 it introduced a telehealth platform to connect its members to major health care providers through services like online appointment booking, and online health consultations between patients and medical practitioners.

Another notable example of streamlining service delivery is the partnership between Najm for Insurance Services and the government’s General Directorate of Traffic. This partnership offers a remote review service for minor traffic accidents in which there are no injuries or need for first responders at the scene. Participants can submit pictures of the damage through a Najm app, allowing both parties to continue their journeys, avoid blocking traffic and initiate a claims process. The first phase of the system was launched in Riyadh in April 2022.

According to a report by multinational insurance advisor Willis Towers Watson, global investment in the insurtech segment surged in the first half of 2021 to $7.4bn, more than the total for the entirety of 2020. The investment focus was on distribution channels, with insurtech companies offering solutions to reduce reliance on agents accounting for 55% of start-up deals. Funded companies hailed from 35 countries worldwide, including Saudi Arabia.

Financial technology company Rasan has tapped SR90m ($24m) in funding from investment firm Impact46. Both entities are headquartered in Riyadh. Rasan is developing three insurance platforms to allow for online sourcing of insurance coverage options and on-the-spot policy underwriting.

Elsewhere, aggregator Tameeni Insurance introduced two platforms, the first of which allows for the purchase of third-party and comprehensive motor coverage within minutes. The second enables online comparison of health insurance options from 11 companies. A final example is Treza, a Saudi car-leasing insurance platform offering live quotations. The emergence of such innovative start-ups is disrupting the insurance sector and expanding access for a consumer base that is increasingly accustomed to buying goods and services online.


With Vision 2030 providing the overarching framework and direction of travel, the insurance sector’s evolutionary process for the remainder of the decade is clear: insurers are to consolidate, in the process, amassing deeper capital reserves to lower systemic risks across the financial sector. They are also expected to embrace digitalisation opportunities evidenced in global trends across the industry. Both retail and commercial consumers can expect to find more options for interacting with insurers and intermediaries, in particular via smartphone applications. Digitalisation will also overhaul back-office functions and procedures, enhancing the processes for activities like claims, compliance and accounting.

As they invest in this future, insurance companies can expect regulator support via the introduction of policies mandating more insurance coverage, and measures to ensure broad-based compliance.