Saudi Arabia’s insurance market will grow by double digits over the next decade, thanks to an underinsured market and the growing popularity of sharia-compliant products, the chief executive of AXA Gulf said on Wednesday.
The world’s No. 1 oil producer is home to the Gulf’s largest population, at 27.6 million people and growing. The kingdom is one of the world’s most under-insured areas, partly due to the belief among some Muslims that insurance indicates a lack of religious faith.
“In Saudi the level of maturity is lower than on a global level, but the level of investment is growing very quickly. On top of the oil economy they invest quite a lot,” AXA Gulf CEO Jerome Droesch said in an interview.
“We will see double digit growth in the Saudi market throughout the next ten years.”
AXA Gulf is part of the France’s AXA , Europe’s second-biggest insurer. Its Saudi business, AXA Cooperative Insurance recently signed a distribution agreement with Saudi insurer Wasilah.
In 2010, gross written premiums in the Saudi insurance market reached SR16.4bn ($4.37bn), up 12.2 percent, compared with a 33.8 percent growth rate in 2009, according to a report from the Saudi central bank.
Saudi law now makes health and car insurance compulsory and there is steady growth in takaful, a sharia-compliant form of insurance that operates along the lines of mutual funds.
With current market penetration for non-life insurance at 0.9 percent and life insurance at 0.1 percent, Droesch said there is plenty of upside in the kingdom. AXA saw double digit growth in this year in the Gulf, posting revenue of $123m in Saudi Arabia in 2010.
The Saudi market for insurance is currently smaller than that of Dubai, the Gulf emirate with a population of 5 million. As the Saudi market grows, most of that will be in health and motor insurance, said Droesch.