To issue and renew iqamas (work and resident permits) in Saudi Arabia, the passport department has started to demand that health insurance cover be provided to expatriate workers by their employers. Such a move not only helps to improve living conditions for the country’s eight million expatriates, but is boosting the insurance market.
More legislation aimed at improving business conditions and standards of living are expected to similarly benefit insurance concerns. New companies are exploiting this underserved market, and some of the world’s largest insurance providers are moving in.
The insurance market has already seen significant growth, with gross written premiums climbing 35 per cent to $1.84 billion against the previous year’s $1.38 billion, according to a survey from the Saudi Arabian Monetary Agency (Sama). General insurance premiums (including motor, property, engineering, marine, energy, aviation) were 65 per cent of the market and rose by 25 per cent to $1.20 billion. Health insurance, representing 32 per cent of the market, saw the greatest increase, climbing 62 per cent to $586 million. Protection and savings insurance, which is 3 per cent of the market, rose 3 per cent to $58.6 million.
While growth is significant, Saudi Arabia remains one of the world’s most underinsured countries. Penetration is expressed by using gross written premiums as a percentage of a country’s GDP. Penetration in the kingdom rose from 0.44 per cent in 2005 to 0.53 per cent in 2006. However, this pales beside the UK market, which is seen as saturated with 3.65 per cent of GDP spent on insurance. By comparison, both India at 0.65 per cent and Romania at 1.2 per cent, spent a greater portion of their GDP on insurance than Saudi Arabia. Forecasts suggest strong growth and the sector could more than double from current levels to $4.8 billion in the next five years.
Up to last year, 42 insurance companies were operating in the Saudi market, but the sector is in transition, aimed at bringing it under greater regulatory control and 13 new players have been permitted to enter the market. Existing companies can operate until next March when all insurance providers must obtain a licence from Sama or leave the market. So far 18 licence applications of the 42 received have been approved by the Council of Ministers, but before a Sama licence is secured, the providers must have an initial public offering, float their shares on the local stock exchange and complete further regulatory requirements.
Last year Sama gave approval to Bank al-Jazira to spin off its Takaful Ta’awuni life insurance business. Takaful is Islamic insurance that complies with Shariah by allowing companies to manage funds on behalf of policy owners. Unlike conventional insurance providers, they do not own these funds.
The funds are pooled based on a cooperative agreement and the policyholder makes a payment to those that need help. Takaful is expected to dominate the Saudi insurance sector in the years ahead because it gives the kingdom’s largely Muslim population products that conform to their religious belief.
The growth potential for Islamic products has been recognised by big insurance companies and a new takaful company is being set up in the kingdom by Prudential, the UK’s second largest insurer in joint venture partnership with Takaful Ta’awuni, which manages $1.06 billion in life policies for 15,000 individual and 22,000 group policy holders.
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RIZK E HALAL–– in a corrupt environment
PDF/Adobe Acrobat - HALAL BUSINESS. FAIR PAY AND BENEFITS TO WORKERS INCL. SALARY INCREASES. CONSIDERATION TO FAMILY SIZE [CHILDREN +. PARENTS + EXTRAORDINARY CIRCUMSTANCES] ...
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