Othman AlKassabi

CEO of Company for Cooperative Insurance (Tawuniya)

Leading Saudi insurance Sector through record growth and innovation amin Vision 2030 transformation

Othman AlKassabi, CEO, Company for Cooperative Insurance (Tawuniya), talks about the insurance company’s ongoing success and current growth strategy as Saudi Arabia transforms the business landscape under its Vision 2030 initiative.

“Within Saudi Arabia’s financial development program, there are several initiatives aimed at growing the contribution of insurance revenue in the nation’s non-oil GDP from 1.5% to 4.5% by 2030. This situation presents giant growth opportunities for companies."

Othman AlKassabi

    • What trends have defined the recent growth of Saudi Arabia’s insurance sector?

      The country has undergone a significant transformation under the Vision 2030 program, which is made up of various programs to support its achievement. The key to any successful transformation is clarity on what needs to be achieved. We are fortunate to have young leadership in the country and transparency in reporting, the latter of which ensures effective planning and execution. These elements are why the insurance sector is now thriving compared to previous years. Within Saudi Arabia’s financial development program there are several initiatives aimed at growing the contribution of insurance revenue in the nation’s non-oil gross domestic product from 1.5% to 4.5% by 2030. Currently, we are at 2%, which indicates both economic growth and the need for increased contributions. This situation presents giant growth opportunities for companies.

      Before joining Tawuniya, I was the COO of the regulator Council for Health Insurance. We conducted extensive market analysis to identify potential growth areas. Today, 60% of the market is mandatory health insurance. For those unfamiliar with mandatory health insurance, it requires private sector employers to ensure all employees receive essential benefits. This generates around 30 billion riyals or $8 billion annually and constitutes 6% of the current insurance portfolio. While life insurance typically forms around 70% of portfolios in international markets, this is not the case in Saudi Arabia. To address this, we focused on improving the market through regulation, reinforcing mandatory insurance such as health, motor and third-party insurance and encouraging innovation.

      We have also witnessed international players like The Cigna Group enter the market and international partnerships. Campaigns around mandatory motor insurance have also contributed to growth. Moreover, government privatization efforts have also expanded the addressable market as private entities require mandatory insurance. The growing number of visitors coming to Saudi Arabia for tourism, be it for pilgrimages or business, also require mandatory insurance. Another significant factor is medical inflation. The health line has seen a double-digit increase, with a 50% rise in new life, vehicle and business insurance along with increased premiums due to cost factors across the entire insurance value chain. The market is undoubtedly on an upward trajectory.

    • The landscape of the insurance sector has also seen several shifts in its regulatory enablers. In the past, we had two regulators overseeing the market, the Saudi Central Bank and the Council for Health Insurance. We have now combined these under one umbrella called the Insurance Authority. This organization is led by industry professionals, including the previous CEO of Tawuniya as chairman and a former CEO of a brokerage company as CEO of the authority. These leaders understand the industry's challenges and how to make things work. I often quote John Collins' book Good to Great that outlines the three following main factors in helping a company transition from good to great: disciplined people, disciplined thought and disciplined action. In a sentence, if you have the right people, you can achieve your goals. This is what we are now witnessing in the insurance sector. We are an ambitious nation with an ambitious leader. Our long-term vision involves seizing market opportunities and continuously improving. We are closely watching the outcomes of the national insurance strategy and exploring partnerships for growth in the region.

    • We established the three following key performance indicators under the strategy: to be the largest insurance company in the Middle East and North Africa region, which we achieved and maintained in 2023; to increase our retained equity beyond 20%, which we have also already accomplished; and to enhance profitability by doubling our 2023 annual profits of 700 million riyals by 2025. We are on track and happy with our progress, which has led us to consider a strategy refresh. We are extremely confident in achieving all our objectives. In terms of our inward strategy, we have actively moved towards being more customer centric, digitally motivated and focused on supporting our workforce. We also strive to excel in operational excellence. To achieve these goals, we need to go beyond being mere insurance providers. Our strategy involves partnering with complementary companies to enhance our ecosystem. We are planning to collaborate with peer-to-peer car rental platform and invested in a digital bank, a digital aggregator, healthcare companies and industrial technology businesses. These partnerships create synergies, improve profitability and increase client retention by offering a seamless customer experience.

      Since launching our five-year strategy, our stock's strength has grown due to our stable financial performance. We saw steady growth in 2021, 2022 and 2023. We have seen a 40% improvement in profitability and a 25% improvement in our top line, which is unique in the insurance markets globally and in Saudi Arabia. Given the government's incentives and our commitment to outperforming the market, we expect this trajectory to continue. Our story with the credit rating agencies is also unique, with two upgrades received in two years. These milestones reflect the depth of our financial position and our strategic plan. As one of the highest-rated insurance companies, we offer strong financial stability. This rating instills confidence in our financial health and ensures that we grow profitably. By 2025 or 2026 we will announce our next horizon.

    • Insurance is typically a service people think of only in unforeseen circumstances, which is a challenge. We have invested in the ecosystem to provide a peace-of-mind value proposition. For example, in the motor segment we have invested in the mobility ecosystem and offered services such as car buying and selling, maintenance and rewards for safe driving through our app. We partnered with African insurance player Discovery to use telematics and tracking for acceleration, braking and mobile usage so that safe drivers can receive rewards such as free gasoline, coffee and cinema tickets. This initiative has significantly increased customer retention, with 90% of comprehensive insurance clients renewing due to these added services. In medical insurance, we introduced the Vitality program that rewards clients for healthy behavior. We now actively encourage employees to engage in wellness activities, which has allowed us to mitigate irrational insurance use and promise annual premium discount for improved health metrics. We have also invested in primary care clinics by offering a range of wellness services and digital consultations that aim to improve overall health rather than simply treat illnesses.

      We have embedded environmental, social and governance principles into all our decision-making processes. We regularly publish detailed reports on our sustainability activities and ensure continuous monitoring and contributions to society. Our commitment to environmental, social and governance values has been recognized as part of our upgraded rating. Sustainability is actively integrated into all our operations. Additionally, our use of data and technology creates a win-win situation for customers by personalizing offerings. Many of our processes utilize robotic process automation and artificial intelligence to detect fraud and inefficiencies and improve our services. These technological advancements will continue to enhance our operations and customer experience. Driven by our talented employees and robust HR strategy, our commitment to growth and transformation will ensure Tawuniya remains a leading company.