Lloyd’s, the oldest insurance market in the world, is expanding operations in Saudi Arabia, the largest economy in the Arab world, rolling out a scholarship programme for Saudi nationals, as it pre-empts strong growth from the kingdom’s economic diversification agenda.
"Saudi Arabia is definitely a big market for us, there are whole new businesses coming in," said Vincent Vandendael, chief commercial officer of Lloyd's in an interview with The National.
“This is all very exciting, as it is business that was not there before. If you have a power plant that already buys insurance, the next year it will buy insurance again. The other stuff will bring brand new buildings, brand new activities, all of which needs to be insured.”
In 2016, gross written premiums in the Saudi insurance market reached 36.85 billion riyals, up about 1 per cent from 36.49bn riyals in 2015, compared to a 19.7 per cent surge in 2015, according to data from the Saudi Arabian Monetary Authority.
The US$500bn futuristic automated ‘mega-city’ planned to span the borders of northwest Saudi Arabia into Jordan and Egypt, is an example of a project that would bring decades of work for insurers, said Mr Vandendael. The entertainment and renewables industries could provide additional opportunities, for example insuring solar panels and providing cover for ticket cancellations, he said.
As part of its strategy, Lloyd’s plans to launch a scholarship initiative exclusively for Saudi nationals in the third quarter of next year.
Under the plans, which are still being finalised, Saudi insurance practitioners would spend three months with a Lloyd's syndicate in London, and "effectively be trained and exposed to certain lines of business before being repositioned back into their jobs in the kingdom", Mark Cooper, general representative, Middle East, at Lloyd's, told The National.
He said the initiative would be open to around six people per year but this is subject to change. Lloyd’s has three confirmed syndicate ‘hosts’ at present and is in talks with others.
Saudi Arabia is the second largest insurance market in the Middle East and North Africa (Mena) for Lloyd's after the UAE. Business generated out of Lloyd’s hubs that service the region – London, Singapore and Dubai – totalled $650m in 2016, of which the UAE accounted for $216m and Saudi Arabia for $135m.
However, Mr Vandendael said it was “pretty much impossible” for Lloyd’s to set up a physical base in Saudi Arabia because insurance companies in the kingdom have to be incorporated as such and then listed on the stock exchange. Lloyd’s, rather, operates as a ‘market’ for insurance brokers and underwriters.
“We are on a journey, though, in terms of how we can best support [Saudi’s] growth, and bring unique products and solutions to that market,” he said.