52% Market Share Held by Two Insurers Highlights Concentration
Saudi Arabia’s insurance sector is undergoing a wave of consolidation, with Fitch Ratings and S&P Global both forecasting intensified merger activity through 2026. The top two players, Tawuniya and Bupa Arabia, already control 52% of gross written premiums as of 2024, underscoring the market’s high concentration and the uphill battle smaller insurers face in competing effectively.
Regulatory Overhaul Spurs Mergers and Exits
The Saudi Insurance Authority, which took over regulatory duties in 2023, is driving a transformation of the sector. A risk-based capital framework is slated for implementation by 2027, aimed at strengthening balance sheets and improving underwriting discipline. However, these reforms come with increased compliance costs and capital requirements, disproportionately affecting smaller insurers with limited scale.
In response, the market has seen a flurry of merger activity. Notable deals include the completed merger of Arabian Shield and Alinma Tokio Marine in late 2023, and the August 2025 binding agreement for Enaya to merge into Salama. Under this deal, Enaya shareholders will receive 0.8215 Salama shares per Enaya share, with 18.89 million new shares issued.
28 Licenses Revoked as Sector Tightens
The regulatory clampdown has already led to the cancellation of 28 insurance licenses in May 2025, part of a broader effort to stabilize the sector. This move followed corrective measures initiated in August 2024 and has prompted firms like Malath and Liva to extend merger talks, with Liva potentially being absorbed into Malath.
Underwriting Margins Under Pressure Despite Growth
Despite the sector doubling in size since 2020, driven by mega-projects and expanding mandatory coverage. Profitability remains uneven: In Q1 2025, only six of the ten largest insurers posted underwriting profits, and several of those were marginal. The remaining four reported losses, highlighting the fragile financial footing of many players.
Medical insurance, the largest segment by premium volume, continues to yield weak returns except for a few dominant firms. Motor insurance, the second-largest segment, remains under intense pricing pressure, particularly in the compulsory third-party category.
New Reinsurance Mandate Adds Complexity
In 2025, a new mandate requires primary insurers to offer local reinsurers the right of first refusal on 30% of their reinsurance placements. While this aims to bolster the domestic reinsurance sector, Fitch warns it may temporarily elevate counterparty risk. Nonetheless, most reinsurance business is expected to remain with highly rated international reinsurers, as local players gradually improve their risk management capabilities.
Future Outlook: Consolidation as a Survival Strategy
S&P Global Ratings sees consolidation and capital raising as essential for solvency, especially as five large insurers currently control 70–75% of total revenues. The sector’s aggregate profits fell 46.5% year-on-year in Q2 2025, exposing vulnerabilities among smaller firms.
Industry experts like Mohammed Al-Faraj of Arbah Capital emphasize that future growth will hinge not only on health and motor insurance but also on emerging segments such as cyber insurance, surety bonds linked to government projects, and long-term savings products.
As Saudi Insurance Market Consolidation continues, the sector is expected to evolve into a more resilient and competitive landscape,though not without short-term turbulence for smaller players.
Also Read: 300 Saudi M&A Filings in 2025: Q3 Snapshot
