Banking & Finance Motor and medical sectors driving Saudi’s insurance business By Gavin Gibbon January 5, 2023, 12:13 PM Reuters Motor and medical insurance accounted for the majority of business Motor and medical segments are helping to drive Saudi Arabia’s insurance industry, according to the latest report from global consultants KPMG. Insurance companies in the kingdom recorded continued growth in the third quarter, with aggregate gross written premiums standing at SAR39.28 billion ($10.45 billion), an increase of 26.8 percent on Q3 2021. Although most categories reported growth, KPMG’s Insurance Pulse report revealed that the motor and medical sectors account for the majority of business. They accounted for 78 percent of gross written premiums and 66 percent of net underwriting income over the nine-month period. Electric vehicles cost more to insure than petrol cars in the UAE UAE’s unemployment insurance ‘first step’ towards welfare state The report said: “The volatility in the insurance market comparative results has settled now in terms of the loss ratios and the net profit after zakat and tax.” Loss ratios in the insurance sector are mathematical calculations that add the total claims reported to a broker and their costs, and then divide them by the total premiums earned over the period. Industry-wide loss ratios and net profit after zakat and tax stood at 81.79 percent and SAR566.12 million ($150.6 million) as of Q3 2022. This compared to 81.36 percent and SAR533.84 million ($142 million) for the corresponding period in 2021. The total assets and total equity of the insurance industry were SAR79.02 billion ($21 billion) and SAR19.08 billion ($5 billion). This showed an increase of 20 percent and 4.8 percent respectively compared to December 3, 2021. As of Q3 2022 this represented an annualised return on equity of 3.96 percent (compared to 3.91 percent at the end of 2021) and an annualised return on assets of 0.96 percent (compared to 1.08 percent at the end of 2021). A previous report from S&P Global forecast a 5 to 10 percent increase in gross written premiums in Saudi Arabia for the entire 2022. This was fuelled by more favourable economic conditions as a result of higher oil prices and the introduction of additional covers. “Unlike in some other emerging markets, the investment risk of Saudi insurance is relatively low, as most assets are held in fixed deposits or money market instruments at securely rated banks,” it said. “Higher minimum capital requirements will help to further accelerate M&A activity this year, particularly among the smaller and loss-making insurers.”