Dammam – The cost of vehicle insurance claims in Saudi Arabia has risen sharply, climbing between 35% and 45% over the last two years, according to insurance specialist Adel Al‑Mutairi. The surge is largely attributed to higher prices for spare parts and increased repair labor rates, which together account for roughly 65% of a typical claim’s value.

Al‑Mutairi explained that spare‑part prices have risen by 20%‑30%, while workshop labor costs have increased by 15%‑25%. He added that modern vehicle components such as radar sensors, cameras and LED lighting can double the cost of repairing even minor damages. As a result, insurers are moving away from purely driver‑record based pricing to a more technical model that incorporates overall claim expenses, vehicle risk indicators and geographic factors.

Under the new technical pricing, premiums are no longer determined solely by an individual’s accident history. Instead, they reflect a combination of the driver’s claim record, the vehicle’s repair cost profile, its age, and the region where it is used. Drivers with clean records still benefit from a no‑claims discount, which can reduce premiums by 30%‑40% compared to high‑claim drivers, but they are not immune to the overall cost increase.

Loss ratios have exceeded 102% for several insurers, meaning that payouts have outpaced earned premiums. This pressure has forced companies to raise rates, especially in major cities such as Riyadh and Jeddah where traffic density and accident frequency drive premiums 10%‑20% higher than in smaller towns.

To mitigate the rising cost, Al‑Mutairi suggested four practical steps for vehicle owners: raise the voluntary deductible from SAR 1,000 to SAR 2,500, which can shave 12%‑18% off the premium; choose authorized workshop networks for cars older than three years when the policy permits; compare insurance offers at least ten days before renewal; and install a dash‑cam to document incidents and reduce claim disputes.

Looking ahead, Al‑Mutairi forecasts a modest continuation of premium growth through the end of 2026, followed by a stabilization period in 2027 as supply‑chain constraints ease and alternative spare‑part options become more available. He warned that the rising cost of comprehensive coverage is prompting a shift toward third‑party liability insurance, which now makes up about 75%‑80% of the market. While cheaper, third‑party policies offer limited protection, covering only damage to third parties and not the insured vehicle itself.

The evolving pricing landscape underscores the need for Saudi drivers to reassess their coverage options, balance cost against protection, and stay informed about market developments as the auto‑insurance sector adapts to higher repair expenses and emerging vehicle technologies.

Sources (learn more):

alwatan.com.sa — https://www.alwatan.com.sa/article/1188564