Auto insurance is taken as luxury by most of Saudis, says Najm Insurance CEO

The percentage of people reluctant to insure vehicles in the Kingdom is high, Najm Insurance Services Chief Executive Officer, Muhammad Al-Sulaiman said during an interview on Saudi Television.

The reason behind this was a lack of motor insurance awareness and motorists considering it as a kind of luxury or an addition to life rather than a necessity and a basic part of car ownership, he said.

Although it is a law in the Kingdom to purchase insurance, firm application of the regulations, some of which are still in the developmental stage to support the expansion plays a role in the low take-up of insurance policies, he added.

Al-Sulaiman pointed out that in 2020, the General Traffic Department suspended the issuance of periodic inspection for a temporary period, and a significant increase in the renewal of insurance policies was noted during this time.

No one today can own a car without a car insurance certificate, so this is a very important matter, Faiz Alhomrani, a financial market analyst told Arab News.

"I think that the reluctance of insurance may be in the comprehensive insurance market. It's weird why there is reluctance in insuring cars as in the Kingdom as it is a must to have insurance when you buy or sell a car, so most probably this is coming from the young university students who can't afford it," he said.

However, he added that third-party liability insurance has a relatively high prevalence in the Kingdom.

According to Al-Sulaiman, with an integrated insurance rate, the prices of policies may reach less than 50 percent of the current price, and raising insurance awareness and increasing the sale and demand for policies would go some way in helping to reduce prices.

Najm Insurance Services covers 75 to 80 percent of the Kingdom's "cases", he said, referring to accidents.