Analytics firm GlobalData has warned lower profit margins and heavy losses, caused by COVID are expected to add to the woes in the solvency position of the Saudi insurers.
In a new report on the Saudi Arabian market, the firm added the ongoing consolidation in the country’s insurance industry is likely to accelerate due to COVID-19 as the insurers continue to struggle. The pressure has seen underwriters take to social media and technology in a bid to keep communications open with current and prospective policyholders.
GlobalData expects the general insurance market to increase gross written premiums (GWP) at a compound annual growth rate (CAGR) of 1.6% in 2020, down from the pre-COVID-19 expectations of 5.2%. Similarly, the forecast growth of 3.6% in 2021 is down from the previously expected rate of 5.1%. However, losses are likely to be almost recovered by 2023 with the expected growth rate to be 5.2%, which is marginally less compared to 5.4% that was previously estimated.
Deblina Mitra, Insurance Analyst at GlobalData, said: “The government has made COVID-19 related medical care free of charge for all residents, including foreign populations who have overstayed their visit. This will ease the burden on the insurance industry. Along with the motor industry reporting a decline in accidents and claims during the lockdown, there has also been a strong decline in the policy sales.”
However, insurers have utilized digital channels to keep the industry moving throughout lockdown.
Ms Mitra added: “Saudi insurers are continuing their business via virtual ad online channels. Live chat on the company’s website, Twitter and WhatsApp are among the key digital initiatives to stay connected to customers.”