KHALID M. AL-DEGHAITHER & JOHNSON VARUGHESE

Saudi Arabia 2021 | FINANCE | B2B

With the Saudi insurance sector rapidly maturing, insurance companies expect penetration to boom in the coming years.

Khalid M. Al-Deghaither
KHALID M. AL-DEGHAITHER
CEO
AON Saudi Arabia
Johnson Varughese
JOHNSON VARUGHESE
CEO
Walaa Insurance

Can you elaborate on some of the services and products you offer?

KHALID M. AL-DEGHAITHER We have four entities: AON Broking Services, which we represent; AON Risk; AON Benfield, which is the reinsurance side; and AON Hewitt, which is a specialized consultant for human resources and employee benefits. At AON Broking Services, we receive the client, study their risks and needs, get their approval, and go to the market for quotes. We study all the files and documents, making sure that the client is being covered according to the right insurance policy. After that, we give our recommendation to the client. The final decision about which company to go with resides with the client. We follow up on our clients' claims and requests and manage all their insurance needs.

What have been the landmark achievements of Walaa Insurance in the last 12 months?

JOHNSON VARUGHESE The most important event for us in the last 12 months was our merger, the first insurance merger in the Kingdom and a significant achievement for the KSA insurance industry. Walaa is a general insurance company that does not write protection and savings (P&S) business and saw Metlife AIG ANB Cooperative Insurance Company's (MAA) previous experience within P&S market as an advantage. With this merger, Walaa will also have ANB as our banking partner. Walaa is a widely held company owned by small shareholders, so we wanted some strategic investors coming in and we were always looking for a banking partnership, which we got, in addition to two international reputed companies, MetLife and AIG as partners. This is a win-win arrangement for all stakeholders.

How will the market in Saudi Arabia grow in the next few years?

KMAD Due to the new initiatives taken by the government in the last decade or so, the economy in Saudi Arabia has enjoyed decent growth. Our growth as a company over the past few years has averaged around 10%. AON's headquarters in Chicago prioritizes stability and continuity over high sales. The overall strategy is to lower profits in favor of higher sustainability. I am sure that by 2030, the Saudi insurance industry will be double in size. This will happen on the back of mega projects like Qiddiya and NEOM. Equally important, companies will be required to provide insurance to all the people entering the job market. This is will generate many opportunities in the market for us and all the other players.

JV The Saudi insurance industry grew by double digits from 2009-2015, slowed down in 2016, and saw negative growth in 2017 and 2018, with all lines showing a negative trend in 2019 except for health insurance. Market penetration in the insurance sector is still on the low side compared to the rest of the world, though we are hopeful that the industry will grow in the long term; however, insurance is closely linked to the local economy, and we have witnessed a slowdown in the last few years. When the economy picks up, so will the insurance industry. This is a long road and might take time; however, in the long term, growth opportunities are excellent.

Which segments of the economy do you see the most opportunity in?

KMAD The biggest one is the SME segment, because SMEs enjoy widespread support from the government and people. We feel that SMEs are the key to increasing business. In addition to this, we now have 33 insurance companies licensed in Saudi Arabia. While a few of them closed because they could not continue, others have merged. In three to five years, there will be less than 25 companies. This will make the market more mature and at the same time improve consumer experience.

How can innovation be spurred in the insurance sector, and what is Walaa doing in this area?

JV We will see a great deal of innovation in the sector, motor insurance, for example. We introduced Telematics almost two years ago. Although we have not yet seen many people downloading the free app to track their driving habits, it is progressing. Motor pricing can be linked with the driving habits and good drivers will be eligible for an additional discount. Saudi Arabia is catching up with the rest of the world, and innovation will be a key differentiation factor.