Saudi Arabia’s Saudi Insurance Authority is now the sole regulator of the kingdom’s insurance sector, having formally absorbed all regulatory powers from both the Saudi Central Bank (SAMA) and the Council of Health Insurance (CHI) as of early 2024. Established by Royal Decree No. 85 on 15 August 2023, the IA ended more than two decades of fragmented oversight and set the stage for the most consequential structural reform in the kingdom’s insurance history. With a risk-based capital overhaul, a new insurance law in consultation, and a Vision 2030 penetration target that requires more than doubling the current rate, insurers operating in or entering Saudi Arabia face a fundamentally different regulatory environment.
From SAMA’s Dual Mandate to a Standalone Regulator: What Royal Decree No. 85 Changed
For over two decades, Saudi Arabia’s insurance sector operated under split jurisdiction. SAMA regulated general and life insurance companies, while the Council of Health Insurance governed mandatory health coverage — a bifurcation that created compliance friction, duplicated reporting obligations, and made coordinated policymaking structurally difficult. Royal Decree No. 85, issued on 15 August 2023, established the Insurance Authority as an independent public agency; the IA commenced operations on 23 November 2023.
The consolidation was not instantaneous. SAMA’s insurance portfolio transferred to the IA in early 2024, and health insurance regulatory responsibilities were transferred from the Council of Health Insurance to the IA on 4 March 2024, completing the authority’s consolidation as sole regulator. The IA is a public agency with financial and administrative independence, reporting directly to the Prime Minister — a governance elevation that signals the sector’s strategic weight under Vision 2030.
The practical implications for insurers are significant. Complaint resolution channels, licensing applications, actuarial filings, and market conduct oversight are now handled through a single authority, reachable via a unified portal. For foreign insurers and reinsurers assessing the Saudi market, the structural question of “which regulator” no longer applies. The remaining question is whether the IA’s accelerated regulatory agenda can be absorbed without disrupting a sector that has been growing at double-digit rates.
The IA reported 14.6% growth in the sector in the third quarter of 2023, its first quarterly report as a functioning authority, and the market has continued its upward trajectory. Saudi Arabia’s insurance gross written premiums reached SR65.5bn ($17.5bn) in 2023, up 22.7% from 2022.
Saudi Arabia’s Insurance Penetration Problem: From 1.6% to 4% of Non-Oil GDP by 2030
Despite the headline GWP figures, the structural gap in Saudi insurance penetration remains the central policy challenge. Insurance penetration stood at 1.6% of GDP in 2023, up from 1.3% in 2022, but Vision 2030 targets exceeding 4% of non-oil GDP by 2030. Reaching that threshold in six years implies not merely organic growth but a deliberate expansion of mandatory and voluntary insurance products across lines that remain underdeveloped — life, agriculture, SME liability, and cyber, among others.
The market structure itself reflects historical concentration. Health insurance accounts for 59% of total GWP (SR38.6bn), and only one foreign insurer — Cigna Worldwide — operates a branch in Saudi Arabia. The number of registered insurers fell from 34 in 2020 to 28 in 2023, with six mergers completed over that period, a consolidation wave the IA has implicitly encouraged through capital adequacy expectations. GWP is projected to grow from SAR68.8bn ($18.4bn) in 2024 to SAR105.3bn ($28.1bn) by 2029 at a CAGR of 8.9%.
For the penetration target to be achievable, the IA’s role extends beyond regulation into market development. The authority is mandated to draft a National Strategy for the Insurance Sector alongside the headline capital metrics. The market analysis published by Norton Rose Fulbright identifies CHI’s absorption as a catalyst: unified oversight of health — the dominant line — is expected to accelerate mandatory coverage expansion and standardize benefit structures across group policies.
The 2026 Parallel Run That Will Determine Who Stays Licensed in Saudi Arabia
The most operationally consequential element of the IA’s reform agenda is the shift to a risk-based capital framework, timed to coincide with the authority’s maturation as a standalone regulator. The RBC framework has a parallel run phase beginning in 2026, during which companies must calculate capital requirements under both the existing and new frameworks simultaneously; mandatory implementation takes effect on 1 January 2027, aligned with Solvency II methodology.
The capital stakes are material. The IA targets doubling sector risk-bearing capital from SR25bn ($6.67bn) to SR50bn by 2030 through the RBC framework. For a sector of 28 insurers, several of which completed mergers in recent years to meet earlier capital thresholds, the prospect of further capital calls during the 2026 parallel run period is a credible solvency event. Five quantitative impact studies have reportedly been conducted to calibrate the framework before publication of final rules.
The IA has described the RBC shift as enabling insurers to make “more flexible decisions, while requiring companies to maintain capital levels commensurate with the nature and scale of the risks they face.” Lines with higher tail risk — health, motor, engineering — will carry heavier capital charges; insurers concentrated in those segments without surplus face the most pressure in 2026.
The RBC timetable sits alongside two other reform pillars. IFRS 17 was adopted for all Saudi insurers from January 2023, changing how insurance liabilities are reported. Mandatory local reinsurance cession was introduced on a phased basis: 20% in 2023, 25% in 2024, and 30% from 2025 — designed to develop domestic reinsurance capacity and reduce premium outflows. The GCC Business Development Institute’s legal update on the IA’s consolidation provides a detailed timeline of the competency transfer.
An InsurTech licensing framework was established in July 2023, requiring technology-driven insurance solutions to be licensed and regulating activities that are “fully provided or designed by the use of technology.” The framework positions the IA as an active participant in shaping digital distribution, rather than adapting legacy rules retroactively.
