Riyadh – Mubasher: Tariffs on the compulsory medical and motor insurances rose significantly since 2014, according to Standard & Poor’s (S&P) Global Ratings.
Gross premiums amounted to SAR 36.3 billion ($9.7 billion) in the 12 months ending June 30, 2016; the compound average growth rate [CAGR] was above 15% over 2011-2015.
“Regulation is generally supportive, new controls are helping reduce the number of large fires, and reinsurance protection is cheap. Plus, yields on the insurance sector's principal investment asset class--cash--are rising sharply,” the report said.
Bank deposit rates stand over 3%, comfortably above the 2.5% fixed rate at which the Zakat religious tax is levied, and beyond the deposit rates of prior years, which were often well below 1% per annum.
“Only some 20 companies appear to be achieving a reasonably satisfactory performance. Therefore, despite the sector's strengths, insurance in Saudi Arabia is clearly not without its problems,” S&P said.
