A recent KPMG report, the Future of Insurance has shed light on the macro-trends that are shaping the Saudi insurance industry along with the financial performance of the Saudi companies.
The report also provides results of the highly coveted KPMG 2021 CEO Outlook Global Pulse Survey which spoke to 50 CEOs of insurance companies across nine key global markets to get a pulse of the present and future of the industry.
Sharing his insights on the sector, Mr. Khalil Al Sedais, KPMG’s Office Managing Partner – Riyadh, Saudi Arabia stated that “Insurers have historically lagged other sectors in their digitization efforts – the pandemic seemed to have brought fundamental change to that. We believe that investing in capabilities to jump on the digitalization bandwagon will pay long-term dividends for the insurance industry.”
Customer-centricity and Technology
The report highlighted that insurance CEOs see customer-centricity and technology as the top areas for investment. The report reveals that 66 percent of insurers are planning to invest in customer-centric technologies, whereas 60 percent have chosen investments in data security measures as a priority.
Digital communications (56 percent) and e-commerce or sales platforms (40 percent) are other areas where top insurance executives are weighing their future investments. Three in every four CEO (76 percent) will build on the use of digital collaboration and communications tools, the next-generation operating model with digitized operations.
Insurers are also keeping tabs on the regulatory side with firms strive to enhance their resilience to business risks and remain compliant with evolving requirements in protecting policyholders’ and shareholders’ interests.
Saudi Market Performance
The report shows that the Saudi insurance industry produced some of its best results during 2020 where Gross Written Premiums (GWP) increased by 3.0 percent, compared to 2019.
Net profit after Zakat and income tax over the twelve months ending 31 December 2020 were 48.3 percent higher when compared to the same period in 2019. The first quarter of 2021 has also yielded a rise of 29 percent in net income after Zakat and income tax when compared to a similar period in 2020 while total assets of the insurance industry have also grown by 7 percent since 31 December 2020. The loss ratio concluded at 83 percent during Q1 2021 as compared to 80 percent in Q1 2020.
With more than half (59 percent) of the premium payments being made, Health insurance continued to be the largest segment.