With strong earnings in Q3 2024, Saudi Arabia’s insurance industry is expected to maintain a positive outlook, driven by the health and motor insurance sectors

Saudi Arabia’s insurance sector is forecasted to maintain stability and moderate growth in 2025, with revenue expected to increase by 10% to 15%, according to a new report by S&P Global. The credit rating agency’s findings highlight a robust performance in 2024, as the Kingdom’s insurance companies saw a 17% rise in net profits in Q3 compared to the same period last year.

The growth is largely attributed to the health and motor insurance markets, which together are projected to make up 86% of the total gross written premiums in the coming years. S&P Global anticipates that the sector will expand at a compound annual growth rate (CAGR) of 5.2% through 2028, with the market size expected to reach SR83.7 billion ($22.28 billion), according to GlobalData.

Despite the positive outlook, the report notes that larger players are capturing an increasingly significant share of the market’s profits. Bupa and Tawuniya, two of the largest insurers in Saudi Arabia, now account for over 50% of the market’s insurance revenue in Q3 2024. The top five insurers collectively generated nearly 75% of the total market revenue, with their share growing by around 1% compared to the previous year.

This concentration of profits among the major players reflects the growing competitive pressures on smaller insurers, who are seeing a decline in profitability. The top five firms now account for about 80% of the total profits in the market, leaving the remaining 21 insurers to divide just 20% of the profits.

S&P Global’s report also draws attention to the significant contribution of medical and motor insurance, which together made up over 80% of the sector’s total revenue in Q3 2024. However, despite the dominance of these two segments, motor insurance premiums saw a slight 2.5% decline compared to the same period in 2023, largely due to intensified price competition.

Looking ahead, S&P Global projects that the insurance penetration in Saudi Arabia will continue to rise, albeit at a slower pace than some other regions. Insurance penetration in the Kingdom remains relatively low compared to other markets, but the sector’s growth potential is substantial, especially with the government’s initiatives to boost coverage.

The introduction of mandatory medical coverage and efforts to reduce the number of uninsured vehicles are expected to further drive demand for insurance in the coming years. S&P Global’s previous reports have emphasised that Saudi Arabia will likely be a key driver of growth within the Gulf Cooperation Council (GCC) insurance sector, particularly as the country works to increase insurance penetration.

The report also noted that the depth of Saudi Arabia’s insurance market, relative to its non-oil GDP, is becoming more evident, signalling a shift towards greater market maturity. This trend is expected to continue as demand for insurance services increases across both the health and motor sectors.

In the first half of 2024, Saudi Arabia’s insurance sector demonstrated solid performance, with earnings rising by 25% to reach SR2.2 billion, compared to the same period in 2023. This strong performance further supports the optimistic outlook for the sector in 2025 and beyond.