Will KSA Lead The Region On Insurance Reform?

Industry and market commentators have long predicted a wave of consolidation in the Kingdom of Saudi Arabia's (KSA) insurance sector. Since the Law on Supervision of Cooperative Insurance Companies (enacted in FY03), the KSA insurance market has seen an influx of new insurers entering the market (35 licenced insurers today). The number of new entrants over such a short period has led to a 'fragmented' market characterised by intense price competition and capital erosion for many stakeholders. Whilst this might be good for consumers, it poses real challenges for insurance companies who have invested in the KSA. The introduction of compulsory insurance (e.g. motor and health) did create optimism amongst shareholders and insurers, but for many, it has not yet delivered the profitable growth they anticipated.