SAMA urges consolidation in Saudi insurance sector: Alkholifey

The Saudi Arabian Monetary Authority (SAMA), the Kingdom’s central bank and insurance market regulator, urged insurers to strengthen their financial position and seek mergers, Ahmed Alkholifey Governor of SAMA said on Wednesday.

Mergers and strengthened financial positions in the insurance sector will be part of the upcoming industry arrangements to ensure higher corporate capital.

“The insurance market regulator is studying new laws that encourage insurers to raise capital, compared to the current SAR 100 million and SAR 200 million cap for insurance and reinsurance firms, respectively,” he said on the sidelines of the 5th Saudi Insurance Symposium 2019.

The Kingdom is looking to enhance the financial solvency of the industry players, as over ten firms have a weak solvency.

SAMA is in talks with three foreign insurance firms to operate in the Kingdom, Alkholifey said, adding that one of those firms is expected to submit a request for a license within the next two weeks.

The Kingdom aims to boost the insurance sector’s contribution to gross domestic product (GDP) from the current 1.5 percent.

The local insurance industry has faced major challenges, mainly weak consumer confidence in the sector performance, Alkholifey noted.