"Saudi Arabia Insurance Report Q4 2014" now available at Fast Market Research

Looking ahead to 2015 and beyond, we anticipate that Saudi Arabia's insurance sector will record solid growth across both segments, thanks largely to its expanding economy. The non-life segment, particularly compulsory motor and health lines, will continue to drive the sector as a whole. However, low penetration levels and a generous government welfare system will continue to prevent the market achieving optimal growth. Although we agree with the view that a period of consolidation is likely at some point over the forecast period, for now we expect the competitive landscape to remain fragmented.

Despite forecasting solid increases in premiums for 2015 and beyond there remains a number of significant barriers to insurers achieving optimal growth. One key issue remain the fragmented nature of the market. Although the top companies enjoy significant market shares, which allows them to retain large portions of gross premiums by absorbing risk, many of the local insurers are sub-scale operations. They are forced to forgo much of their revenue in the form of outwards reinsurance, which in turn has curtailed profits. Moreover, much of the market lacks the necessary skills to offer a diverse portfolio. As such, price competition is severe, which in turn further restricts companies' profitability.

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Analysts have argued that given the nature of the competitive landscape, a period of consolidation is likely in the near future. While we agree with this view, we maintain that in the short term it is likely that small insurers will be able to resist a wave of acquisitions and mergers by the larger players, largely through relying on increasing values of policies especially in the basic, compulsory lines. Therefore, the market structure is unlikely to alter significantly in 2015, however we may revise this forecast in the months ahead.

The life segment is likely to remain underdeveloped in the years ahead, thanks primarily to a lack of demand from the wider local...

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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