Analysts surveyed said the decision of the Directorate General of Traffic on the automatic connection of vehicle insurance procedures is "positive" and will increase the total premiums written for cars in the sector.
Analysts noted that the actual impact depends on the level and dynamics of the decision implementation, and they expected this effect to be more pronounced within a year of implementing the decision.
Adel Al-Issa, the media spokesman for Saudi insurance companies, said that the increase in the number of people insured will reduce the possibility of financial problems between the parties to the accident. In addition, it will increase awareness of insurance, improving traffic safety. This step, which will help reduce accidents and injuries, will in turn have a "very positive" effect on social development.
Al-Issa added: "It is expected that there will be a positive impact on the premiums of the insurance companies from the fourth quarter of the year." He expected the real impact of the decision to be clearer within a year of implementation.
Abdul Ilah Al-Qassim, an economic analyst, said that the Saudi insurance sector witnessed growth and a doubling of total insurance premiums over the past decade to 37.8 billion riyals. However, the insurance industry indices (depth and density) are still below the global average and emerging markets.
Furthermore, the letter from the Financial Sector Development Program (FSDP) highlighted the importance of growth and stimulation of the Saudi insurance sector. It also set targets and indicators for the development of the sector, and increased its total amount to 75 billion Saudi Riyals through a set of initiatives, to raise the depth of insurance to 2.9% from 1.27% (the global average is 6%).
Al-Qassim added that FSDP initiatives have set goals for various types of insurance, such as raising auto insurance coverage to 75% in 2020, from 45-50% today, indicating that the Department of Traffic's decision it can contribute significantly to improving this coverage.
Al-Rajhi Takaful Insurance Company, AXA Cooperative Insurance Company, Tawuniya and Walaa Cooperative Insurance Company account for 45% of total written premiums in the sector.
Al-Rajhi Takaful, Tawuniya and Al-Wala 'companies have achieved high market shares in terms of global warming potential in the automotive sector. Al-Qassem explained that these companies are likely to be in a good position to obtain higher market shares, as the number of individual subscribers in the automotive sector grows.
The expected coverage rate is likely to gradually increase, in light of the average value of insurance policies, which is not expected to be at the highest level in the first year. Insurance companies have recently introduced promotions and discounts of up to 15% to gain greater market shares from new customers.
The global global warming capacity of the sector is expected to grow by SAR 1.5 to 2 billion in the first year of implementation. Al-Qassem added that this would also help to support corporate profits, amid a decrease in losses from this type of insurance.
In support of the aforementioned views, Muhannad El Desouky, Chief Financial Officer of Walaa Insurance, said he expects a positive impact from the Traffic Department's decision to strengthen the GWP and the market share of the automotive sector.
El-Desouki added: "Taking into account the minimum profit margins of compulsory auto insurance, given that the demand for this product is linked to the price of the policy, it is expected that the decision of the Department of Traffic will be reflected positively in the states. financial ".
He predicted that this decision would lead to strengthening the ability to cause global warming starting in the third quarter of 2020, as insurance companies are expected to achieve returns in 2021 and 2022.
In response to a question about the expected profit margins of the automotive sector after the implementation of the decision, El Desouki said: "It is difficult, as profit is generally affected by several factors. Due to consumer sensitivity towards prices of mandatory insurance products, we can witness a decrease in prices since some companies aim to increase their participation in the market in the short term, which may affect the players in the sector ”.
Commenting on vehicle insurance discounts, Al-Issa said discounts of up to 80% are available to those who have no claims. Discounts will run from July 9 to September 6, 2020.
Analysts noted that the actual impact depends on the level and dynamics of the decision implementation, and they expected this effect to be more pronounced within a year of implementing the decision.
Adel Al-Issa, the media spokesman for Saudi insurance companies, said that the increase in the number of people insured will reduce the possibility of financial problems between the parties to the accident. In addition, it will increase awareness of insurance, improving traffic safety. This step, which will help reduce accidents and injuries, will in turn have a "very positive" effect on social development.
Al-Issa added: "It is expected that there will be a positive impact on the premiums of the insurance companies from the fourth quarter of the year." He expected the real impact of the decision to be clearer within a year of implementation.
Abdul Ilah Al-Qassim, an economic analyst, said that the Saudi insurance sector witnessed growth and a doubling of total insurance premiums over the past decade to 37.8 billion riyals. However, the insurance industry indices (depth and density) are still below the global average and emerging markets.
Furthermore, the letter from the Financial Sector Development Program (FSDP) highlighted the importance of growth and stimulation of the Saudi insurance sector. It also set targets and indicators for the development of the sector, and increased its total amount to 75 billion Saudi Riyals through a set of initiatives, to raise the depth of insurance to 2.9% from 1.27% (the global average is 6%).
Al-Qassim added that FSDP initiatives have set goals for various types of insurance, such as raising auto insurance coverage to 75% in 2020, from 45-50% today, indicating that the Department of Traffic's decision it can contribute significantly to improving this coverage.
Al-Rajhi Takaful Insurance Company, AXA Cooperative Insurance Company, Tawuniya and Walaa Cooperative Insurance Company account for 45% of total written premiums in the sector.
Al-Rajhi Takaful, Tawuniya and Al-Wala 'companies have achieved high market shares in terms of global warming potential in the automotive sector. Al-Qassem explained that these companies are likely to be in a good position to obtain higher market shares, as the number of individual subscribers in the automotive sector grows.
The expected coverage rate is likely to gradually increase, in light of the average value of insurance policies, which is not expected to be at the highest level in the first year. Insurance companies have recently introduced promotions and discounts of up to 15% to gain greater market shares from new customers.
The global global warming capacity of the sector is expected to grow by SAR 1.5 to 2 billion in the first year of implementation. Al-Qassem added that this would also help to support corporate profits, amid a decrease in losses from this type of insurance.
In support of the aforementioned views, Muhannad El Desouky, Chief Financial Officer of Walaa Insurance, said he expects a positive impact from the Traffic Department's decision to strengthen the GWP and the market share of the automotive sector.
El-Desouki added: "Taking into account the minimum profit margins of compulsory auto insurance, given that the demand for this product is linked to the price of the policy, it is expected that the decision of the Department of Traffic will be reflected positively in the states. financial ".
He predicted that this decision would lead to strengthening the ability to cause global warming starting in the third quarter of 2020, as insurance companies are expected to achieve returns in 2021 and 2022.
In response to a question about the expected profit margins of the automotive sector after the implementation of the decision, El Desouki said: "It is difficult, as profit is generally affected by several factors. Due to consumer sensitivity towards prices of mandatory insurance products, we can witness a decrease in prices since some companies aim to increase their participation in the market in the short term, which may affect the players in the sector ”.
Commenting on vehicle insurance discounts, Al-Issa said discounts of up to 80% are available to those who have no claims. Discounts will run from July 9 to September 6, 2020.
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