Saudi Arabia’s ageing population and regulatory changes regarding the mandatory purchasing of health insurance are the key drivers behind the strong growth of the health insurance sector in the kingdom, a report said.

The life expectancy of Saudi Arabians is expected to rise from 74.6 years in 2013 to 75.7 years by 2018, explained the new report “Personal Accident and Health Insurance in Saudi Arabia, Key Trends and Opportunities to 2018” from Timetric, a leading provider of online data, analysis and advisory services on key financial and industry sectors.

Furthermore, the number of people aged over 65 was 0.83 million in 2013 and is forecast reach 1 million in 2018. As people get older they are more vulnerable to a wider range of illnesses, many of which can involve costly treatment. Therefore, as the size of this cohort of the population grows, this is expected to boost demand and result in greater premium revenues being accrued by insurers, the report said.

Moreover, the Saudi Arabian government has budgeted to construct 27 new hospitals, in addition to the 117 hospitals and 8 medical cities already under construction. As a result, the increased capacity and availability of healthcare services will enhance the attractiveness of health insurance, making customers more inclined to opt for plans that offer access to higher quality services.

Saudi Arabia’s personal accident and health insurance segment accounts for 51.1 per cent of the overall Saudi Arabian insurance sector, recording a CAGR of 15.3 per cent over the review period (2009-2013), the report said.

Regulatory changes will support demand

In 2005 the Saudi Arabian government made purchasing health insurance compulsory for expatriates. Ten years later it has extended this measure to Saudi nationals, who account for 70 per cent of the population. As a result, strong growth is expected to materialise in the health insurance segment.

“Despite the Saudi Arabian Ministry of Health still providing basic healthcare services free of charge to Saudi citizens, this change in the law regarding compulsory purchasing of health insurance is set to support the 15.6 per cent annual growth forecast for the personal accident and health insurance market up to 2018,” explained Jay Patel, insurance analyst at Timetric. – TradeArabia News Service