A number of executive officials of several insurance companies agreed that the annual growth rate of the insurance sector would increase by 13% during 2013. With a state budget that is about 15 percent higher than previous year's, there will be more spending and investment in government projects, part of which will go to the sector given healthcare projects, medical error costs and engineering insurance that is a must for a government project.
Metib Al-Roughi, president of Weqaya Insurance, said the rate increase prediction is attributed to the state's huge budget spending which will reflect on insurance market shares for companies. The Minister of Finance's statement said that direct spending will be on education and healthcare indicates that several types of insurance will grow. Insurance relation to the state's budget lies in the costs of medical errors and the obligatory engineering insurance of projects, in addition to property insurance.
Fahd Al-Husni, executive president of the Saudi Reinsurance Company, said the sector in Saudi Arabia has been witnessing notable growth during the last 5 years. From 2007 to 2011 the volume of installments increased from SR 8.5 billion to SR 18.5 billion. Government spending and economic development projects have contributed in this growth, he said, adding that it is expected that the state budget contribute to increasing demand for different kinds of insurance, especially engineering, property and energy and marine insurances because they are directly linked to projects related to infrastructure, transportation, construction, ports, electricity and water.
Reinsurance plays a vital role in supporting the economy because it provides insurance companies with an additional underwriting capacity (maximum amount of financial risk companies assume) that enables the companies to assume more risks and larger amounts of transactions without having to increase their capital or financial surpluses. This will allow them to play their role in insuring development and infrastructure projects.
Adel Aleisa, chief executive officer of Solidarity Saudi Takaful Company, said the sector is capable of providing different insurance solutions to accommodate all projects included in the national budget.