Independent unified insurance regulator to be established in Saudi Arabia

The authorities in Saudi Arabia have approved the establishment of an independent regulatory authority to oversee the insurance sector and act mainly as a unified supervisory body in the market, said the Kingdom's Minister of Finance Mohammed bin Abdullah Al-Jadaan in his keynote address at the sixth Saudi Insurance Symposium in Riyadh. He said the new regulatory body would unify the regulatory and supervisory entities operating in the Saudi insurance market. As first reported in our sister publication Middle East Insurance Review, currently, the Insurance Supervision Department (ISD) at the Saudi Central Bank (SAMA) is in charge of the supervisory and regulatory tasks for the insurance industry, while there is also the Council of Health Insurance (CHI) which oversees the cooperative health insurance system in the kingdom. Al-Jadaan added that the SAMA submitted the idea of setting up an independent authority to the government with the aim of unifying regulatory and supervisory tasks under one umbrella. He added that the new regulatory agency would be launched soon. Market sources told Middle East Insurance Review that the market has been working with two regulatory bodies (the ISD and the CHI) for some time and looks forward to the new independent authority being formed before the end of this year. Al-Jadaan, who is also chairman of the Financial Sector Development Programme, emphasised the government’s support for the insurance industry and highlighted the promising future for players, especially in the life and savings field. Yet, he noted that there is a dire need for insurance companies to seek mergers and acquisitions in order to create larger entities that are capable of serving the local market and expanding abroad. “(We) encourage M&As. Considering the economic development the country is witnessing, the insurance sector has not reached the aspired level yet,” he said. He added that, for some time, the government had been discussing with the SAMA and other main actors in the sector the needs of the insurance industry and the various means by which it could advance and develop. “(A main) goal is to attract new investments and high-quality partners. There are massive opportunities and I call on investors to… participate through opening branches or finding suitable M&A opportunities.” Dr Fahad Al-Mubarak, governor of the SAMA, stressed that the insurance sector represents one of the main pillars in the development of the financial sector and is considered a vital component of the financial sector development programme, which directly contributes to achieving the objectives of the Kingdom's ‘Vision 2030’ and supports economic growth in the country. He pointed out that the insurance sector is currently experiencing an active pace of mergers and acquisitions, with the completion of four mergers in 2021 and this year to date. Al-Mubarak stated that the insurance sector posted satisfactory performance in 2021, with growth estimated at about 8.5% as gross written premiums rose to SAR42bn ($11.2bn), while the sector’s solvency increased to high levels. For further news from Middle East Insurance Review, please click here.

Independent unified insurance regulator to be established in Saudi Arabia

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