Closing Bell: Saudi Arabia’s main index closes in green at 12,439

RIYADH: Saudi Arabia’s insurance sector saw a 16.9 percent year-on-year revenue growth in the third quarter of 2024, driven by increases in motor, property, and medical coverage, according to a new report.

The analysis, published by KPMG, attributes this growth to ongoing economic reforms under the Kingdom’s Vision 2030 initiative, emphasizing regulatory measures that have strengthened the sector’s development and stability.

Medical insurance played a key role in the overall growth, with revenues rising by 13.6 percent, largely due to the government’s implementation of mandatory health coverage regulations.

Motor insurance also experienced a significant boost, with revenues up 22.7 percent year on year. This growth is linked to an expanding auto market and regulatory measures ensuring compliance with insurance requirements.

The property and casualty insurance segment also saw significant growth, with a 20.4 percent increase in revenues, reflecting the ongoing expansion of infrastructure and real estate projects across Saudi Arabia.

This growth comes as the Kingdom’s regulatory body works to improve the sector’s efficiency and stability, while supporting local infrastructure and fostering a thriving business ecosystem.

According to data compiled by Arab News from Bloomberg, Saudi Arabia’s insurance sector delivered a strong performance in the first half of 2024, with earnings rising by 25 percent to SR2.2 billion, compared to the same period in 2023.

The report also noted that the sector continues to attract both local and international investors, thanks to favorable market conditions and robust regulatory frameworks.

“Saudi Arabia’s insurance industry is at the forefront of the Kingdom’s economic transformation, aligning with Vision 2030’s ambition to diversify the economy,” Ovais Shahab, partner and head of financial services at KPMG in Saudi Arabia, said.

He added: “The sector’s impressive growth, driven by regulatory reforms, technological innovation, and expanding market demand, underscores its critical role in shaping a resilient and diversified financial landscape.”

KPMG highlighted that, despite the sector’s growth, challenges such as pricing competition and market fragmentation remain.

However, advancements in digital insurance solutions and improved customer engagement strategies are expected to drive continued expansion and help the sector navigate these challenges.

“As insurers embrace digital transformation and sustainability, they are not only enhancing customer experience but also addressing emerging risks, positioning the industry for long-term success in a rapidly evolving market,” Salman Chaudhry, partner and insurance lead at KPMG Professional Services, said.

Platforms like Tameeni and BCare are simplifying access to insurance policies, while artificial intelligence-driven solutions are improving claims processing and fraud detection.

The report also noted the rise of telematics-powered, usage-based insurance, which is driving a shift toward more personalized coverage options.

The establishment of the Insurance Authority in November 2023 has laid the groundwork for deeper reforms, enhancing governance, product innovation, and reinsurance frameworks. This move underscores the Kingdom’s commitment to building a strong and resilient insurance sector in line with the goals of Vision 2030.

Additionally, the recent implementation of IFRS 17 and IFRS 9 standards has strengthened transparency and financial comparability among insurers.

This is reflected in a strong third-quarter combined ratio of 93.69 percent and a 25.9 percent year-on-year increase in net profit before zakat and tax, reaching SR3.90 billion.

The sector’s total assets also saw a 20 percent rise, reaching SR84.91 billion.

“As Saudi Arabia’s insurance sector continues to evolve, it is well-positioned to play a pivotal role in the Kingdom’s economic transformation,” Shahab remarked.

He added: “Supported by regulatory foresight, innovation, and the Vision 2030 framework, the industry is poised to further contribute to Saudi Arabia’s diversification and growth.”

According to credit rating agency S&P Global in December, Saudi Arabia’s insurance sector is expected to remain resilient in 2025, with top-line revenue growth forecasted between 10 percent and 15 percent.

S&P also reported that the net profit of insurance companies in the Kingdom grew by 17 percent in Q3 2024, compared to the same period in 2023.

RIYADH: Saudi Arabia’s real estate sector is gaining momentum as investments in sports and entertainment create new opportunities for infrastructure development and economic stability, according to industry experts.

During a panel discussion on the final day of the Real Estate Future Forum, Chris Styring, director of the Sports Business Group at Deloitte, highlighted the potential for long-term benefits from sports infrastructure projects.

The Kingdom’s real estate sector is growing, with 192 project licenses issued in 2024, totaling SR147 billion ($39 billion), while the sports market is set to grow from $8 billion to $22.4 billion by 2030. 

This surge in sports investment is driving real estate expansion, fueling demand for stadiums, training facilities, and mixed-use developments.

With the nation preparing to host the FIFA World Cup in 2034, Styring emphasized the urgency of upskilling local professionals. 

“The World Cup seems a long way away, but it’s not. You’ve got to prepare. You’ve got to upskill the next generation of people who will be the event managers, the commercial managers, the people who deliver, the hospitality sector, and the real estate sector that’s actually building the infrastructure,” he said. 

The Deloitte official believes there is “a great opportunity” to build sports infrastructure that can “give back”, adding that Saudi Arabia is well-positioned to host major sporting events in the future. 

“I foresee that one day you’ll have a world-class marathon,” he predicted at the Riyadh event.

Simon Oaten, lead partner for Travel, Hospitality, and Leisure at Deloitte UK, underlined that preparations for such large-scale events are already accelerating. “Deadlines really focus the mind, and we’re starting to see that in a way that we weren’t seeing it nine to 12 months ago,” he observed. 

Beyond sports, regulatory clarity and tax planning are crucial factors for investors in Saudi Arabia’s real estate sector, according to Hadeel Biyari, partner for Indirect Tax at Deloitte Middle East. 

“All investors, whether they’re local or foreign, they look for certainty,” she said

Biyari also pointed out that Deloitte is actively developing local real estate expertise, adding: “That’s not only from a tax perspective but also from a legal perspective because I deal with tax disputes and litigation.”

As Saudi Arabia continues to drive innovation across all sectors in line with Vision 2030, the experts agreed that preparation, investment, and strategic planning will be key to ensuring the real estate sector thrives alongside the Kingdom’s growing sports and entertainment industries.