Saudi Arabia’s Insurance Authority is tightening oversight of motor insurance pricing to ensure rates are fair, sound and sustainable, while curbing practices that could undermine competition.
It has also introduced six regulatory standards for motor insurance pricing, requiring insurers to set premiums that are fair and reasonable and to base them on underwriting criteria that avoid pricing below technically sustainable levels or exposing insurers to losses.
Consumer protection
Specialists told Asharq Al-Awsat that the rules should make pricing more transparent without pushing insurers toward uniform rates, preserving competition on price, service and claims quality.
They cautioned that consumers could be negatively affected if the standards artificially narrowed price differences. But rules that curb undisciplined pricing while leaving room for genuine competition would benefit the market and policyholders.
Salem Baajajah, a professor of economics at King Abdulaziz University, stressed that oversight should focus on the fairness of pricing methodologies rather than making final rates similar across insurers.
He explained that the measures would help prevent unfair pricing, price dumping and other harmful practices while allowing insurers to compete through operational efficiency, claims management, service quality, innovation and more accurate risk models.
Fair trade
Consumer protection specialist Abdulaziz Al-Khudairi noted that the Insurance Authority was also addressing ambiguities surrounding vehicle leases to protect lessees’ rights, increase transparency and apply the principle of “fair trade.”
He explained that comprehensive insurance rules require financing companies to obtain at least three insurance quotes annually and offer the lessee the lowest-priced option, preventing customers from bearing unnecessary additional costs.
According to Al-Khudairi, discounts granted by insurers, including for a claims-free record, are credited to a dedicated insurance account for the lessee, with the balance settled at the end of the contract.
The rules also require vehicles to be revalued annually to reflect depreciation, with premiums declining accordingly instead of remaining based on the vehicle’s original new-car value throughout the financing period.
Al-Khudairi added that the lessee is the “primary beneficiary” in cases of partial loss, receiving compensation for repairs and managing vehicle maintenance, while the lessor is the “secondary beneficiary” in a total loss, covering the outstanding financing balance.
Rising prices
Some policyholders reported that motor insurance prices in Saudi Arabia have risen steadily, in some cases to six times previous levels. They expect the new standards to produce fairer rates based on clear and sound principles.
The Saudi Insurance Market Report for the first quarter of 2026 showed coverage expanding to 11.2 million vehicles, with gross written motor insurance premiums reaching SAR 5 billion ($1.3 billion). The monthly complaint rate fell to 0.09 percent from 0.12 percent.
