Riyadh, Asharq Al-Awsat—Insurance companies in Saudi Arabia will suffer major losses during the Eid holiday season as a result of a spike in claims due to the increased incidents of motor accidents and health problems that tend to follow the Muslim holy month of Ramadan, industry sources have told Asharq Al-Awsat.
Insurance expert Murad Zuraiqat said that losses to the car insurance subsector alone will likely rise by “at least 10 percent” during the Eid Al-Fitr holiday period—which in the Kingdom runs for 10 days.
Zuraiqat put this down to a rising phenomenon in the Kingdom of reckless driving during the Eid season—which sometimes sees motorists challenging each other to races—particularly singling out the younger segment of the population.
He also cited a rise in accidents involving rented vehicles, which he said accounted for 20–25 percent of total car insurance premiums in the country.
The Saudi insurance sector is dominated by motor and health insurance, which together account for 55 and 23 percent respectively of the entire domestic market—estimated at 25 billion Saudi riyals (6.6 billion US dollars) in 2013, according to a report by Albilad Capital, the investment banking arm of Saudi Arabia’s Bank Albilad, released earlier this year.
Health insurance claims will also be on the up during the holiday season, Zuraiqat said, “due to the expected 15-percent increase in hospital and medical center visits” during the Eid Al-Fitr season, which immediately follows the Muslim holy month of Ramadan during which all abled-bodied Muslims are required to refrain from eating and drinking between sunrise and sunset.
“After the end of Ramadan, many children and people who have fasted [during the month] suffer from health problems, especially those that suffer from troublesome illnesses . . . due to their not following their [prescribed] dietary schedules,” he said.
Industry expert Abd Al-Rahman Atta told Asharq Al-Awsat that the Eid period was a “particularly difficult” one for the health and car insurance subsectors.
He also pointed out that the sector as a whole still faced many difficulties, with both claimants and insurers not adhering to clauses.
Zuraiqat, however, expects the sector will grow 20 percent to reach 30 billion riyals (8 billion dollars) by the end of 2014, and 34 billion riyals (9 billion dollars) by the end of 2015.