Saudi insurance sector: Top five players dominate as competition tightens

Saudi Arabia's top five insurers now account for approximately 80% of the sector’s total profits, a significant increase from 68% last year, as smaller players struggle in a market with intensifying competition, according to an S&P Global Ratings report.

The study found that 18 out of 26 insurers experienced a decline in profits during the third quarter of 2024 compared to the same period in 2023, signaling increasing market consolidation in the Kingdom's insurance industry.

Bupa Arabia and Tawuniya, the leading insurers, collectively command over 50% of the market’s revenue.

The report projects that revenue growth in Saudi Arabia's insurance industry will slow to about 10-15% in 2025, following a 17% year-on-year rise in the third quarter of 2024.

Challenges in the insurance market

Medical and motor insurance dominate the market, contributing over 80% of total insurance revenue. However, the medical segment showed signs of weakness, with only Bupa, Tawuniya, and Malath maintaining positive insurance service results in Q3 2024. Motor insurance, although seeing improved operational performance for many insurers, faced a 2.5% decline in premiums due to heightened price competition.

Investment income remains a critical driver of profitability, accounting for about two-thirds of net profits in Q3 2023 and 2024.

S&P anticipates continued mergers and acquisitions in 2025 due to stricter regulatory requirements and challenges faced by some insurers in meeting minimum capital thresholds. Currently, eight companies are engaged in merger discussions.

Although the life insurance segment is growing, it remains small, contributing just 2% of total revenue in Q3 2024.

Outlook and risks

S&P maintains a stable outlook for rated Saudi insurers in 2025 but cautions that increased competition, particularly in motor third-party liability, and potential interest rate cuts could weigh on profitability and capital strength.

While 2023 was a record year with all insurers reporting profits—smaller companies accounted for a third of total profits — 2024 saw a dramatic shift, with the largest five firms cementing their dominance.

Despite geopolitical tensions, S&P assumes in its baseline scenario that the Israel-Hamas conflict will remain contained, with no major impact on the sector.