New Financial Services market report from Business Monitor International: "Saudi Arabia Insurance Report Q1 2015"
[USPRwire, Wed Jan 21 2015] Over 2015 Saudi Arabia's insurance sector will continue to record solid single-digit growth, largely due to steady demand for compulsory, basic lines. Low penetration levels and market fragmentation will remain the greatest barriers to insurers achieving above-average growth in premiums. Despite the opportunity for a period of consolidation over the long-term, we believe that the market will remain relatively unchanged, at least over 2015
BMI takes the view that despite the market achieving solid growth over the forecast period, significant barriers will remain for many insurers. Continued market fragmentation will suppress growth. The main issue is that demand is largely focused on basic compulsory lines. Therefore, insurers can only compete on the basis of price in these lines rather than product innovation. As such they are unable to raise their profitability and capital levels. This prevents them from internally absorbing risk and in doing so boosting their net premium levels. We believe that this will continue to be a problem for the market over 2015 and beyond.
It appears unlikely that a period of consolidation will occur over 2015. At present small scale insurers are likely to be able to sustain growth by focusing on compulsory, basic lines. However, given the severe price competition and rising claims across many lines, it is possible that in the long-term sub-scale players will be forced out of the market.
The life segment will remain in an embryonic stage of development over 2015 and, in all likelihood, for the remainder of the forecast period. Nonetheless, growth will be strong due to the continued demand of the expatriate workforce, which is likely to expand in line with economic output. However, generous social provisions for the local population means that demand among Saudis for life insurance will remain weak. In addition, some cultural hostility to life insurance, as well as conventional insurance in general, will mean that demand...
The Saudi Arabia Insurance Report has been researched at source and features Business Monitor International (BMI)'s independent assessment and forecasts for the insurance sector. It examines industry developments, key growth drivers and risk management projections, including the macroeconomic situation, government policy, regulatory environment and the level of development and potential for growth, broken down by line. Leading insurers are profiled, covering premiums, products and services and competitive positioning.
BMI's Saudi Arabia Insurance Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the Saudi insurance industry.
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