Saudi Arabia’s general insurance industry is expected to grow at a compound annual growth rate (CAGR) of 6.2%, from SAR40.3 billion ($10.7 billion) in 2021 to SAR54.6 billion ($14.5 billion) in 2026 in terms of gross written premiums (GWP), according to GlobalData. The leading data and analytics company notes that growth will be driven by an increasing number of natural disasters, as well as government measures to expand health insurance.

According to GlobalData’s Insurance Database, Saudi’s general insurance industry is projected to register a slower growth of 5.6% in 2022 and 5.7% in 2023 as compared to 7.5% growth in 2021. The growth in 2022 and 2023 will be mainly supported by the increase in demand for health insurance and property insurance.

Personal accident and health (PA&H) insurance is Saudi’s largest general insurance line, accounting for a 62.5% share of GWP in 2022. It is forecasted to grow at a CAGR of 6.7% between 2021-2026, supported by the country’s aging population and favorable regulatory developments. For instance, in November 2022, the Council of Cooperative Health Insurance (CCHI) announced that while renewing or extending tourist visa, all visitors should purchase a new health insurance from local insurance companies. This comes after the government announced in 2020 that all tourists visiting Saudi Arabia should purchase mandatory health insurance from CCHI-approved local insurers during their stay.

Additionally, in September 2022, the CCHI proposed health insurers expand insurance coverage limits for existing policyholders. The proposal includes adding 18 new benefits to health insurance policies and increasing coverage limits for mental health treatment from SAR15,000 ($4,000) to SAR50,000 ($13,333.3) for acute and chronic psychiatric cases.

Motor insurance is the second-largest insurance line, accounting for a 19.6% share of premiums in 2022. It declined by 2.3% in 2021 due to a price increase caused by inflation of automotive spare parts and a decline in vehicle sales. A recovery in vehicle sales will help motor insurance grow by 2.4% in 2022 and 3.7% in 2023.

Property insurance is the third largest general insurance line, accounting for an 11.7% share in terms of GWP in 2022. Property insurance is expected to grow at a CAGR of 7.3% over 2021-26. Increased exposure to natural catastrophe damages will support demand for property insurance in Saudi Arabia as sand and dust storms and droughts are recurring natural events in Saudi Arabia.

Liability and marine, aviation, and transit insurance account for the remaining 6.2% share in 2022.

Manogna Vangari, Insurance Analyst at GlobalData, comments: “Favourable regulatory developments and demand for property insurance due to recurring natural disasters will drive growth in the general insurance industry in Saudi Arabia over the next five years.”