How reinsurance is shaping Saudi health insurance

Saudi Arabia’s healthcare system is changing rapidly. Driven by Vision 2030, the country is moving away from a predominantly government-funded model toward universal health insurance. At the centre of this transformation is reinsurance, a core mechanism that enables health insurance systems to expand sustainably and manage risk effectively.

Reinsurance is a mechanism through which insurers transfer part of their risk to specialist risk carriers. When an insurer underwrites a large portfolio of health policies, it faces the possibility that claims could exceed its financial capacity, particularly during events such as pandemics or unexpected increases in high-cost claims. Reinsurers absorb a portion of this exposure, acting as a financial stabiliser.

Without reinsurance, a relatively small number of very large claims could threaten an insurer’s solvency. This risk is amplified in a fast-growing and evolving market such as Saudi Arabia’s.

The global reinsurance sector is in strong financial health. Total reinsurer capital reached a record USD 785 billion at the end of 2025, nearly 10% higher than the year before. Returns have also been robust, with reinsurers generating returns on equity of around 17%, approximately double the estimated cost of equity.

For Saudi Arabia, this matters. A well-capitalised global reinsurance market means greater capacity, more competitive pricing, and a stronger appetite to support expanding health insurance markets as coverage broadens.

Saudi Arabia’s reinsurance market is growing quickly. Total reinsurance premiums reached approximately USD 2.93 billion in 2024, up from USD 2.45 billion the year before. The market could reach USD 5.33 billion by 2030, with forecasts pointing to steady annual growth of around 5.2% through 2028.

A key driver has been regulatory reform. Since 2025, insurers have been required to offer at least 30% of reinsurance treaty and facultative business to licensed local reinsurers before placing risks internationally, subject to available local capacity. This “first right of refusal” framework has been introduced in phases, starting at 20% in 2023 and increasing to 25% in 2024.

The impact has been significant. Saudi Reinsurance Company (Saudi Re) reported a 77% increase in Saudi-market reinsurance revenue during the first nine months of 2024, reflecting the effects of this phased local cession framework.

Saudi Arabia’s health insurance ambitions are substantial. Health insurance coverage is expected to expand significantly as the country advances toward universal health coverage under Vision 2030.

Historically, private health insurance primarily covered expatriate workers. As coverage extends to Saudi nationals, insurers face a different risk profile. Citizens exhibit distinct healthcare utilisation patterns, and there is limited historical claims data under a fully insured framework. This increases pricing uncertainty and heightens the importance of reinsurance as a risk buffer.

The establishment of the Centre for National Health Insurance (CNHI) reinforces the shift toward strategic purchasing and risk-based healthcare financing, creating an environment in which strong insurance and reinsurance capacity becomes increasingly important.

Universal coverage cannot be delivered by a small number of large insurers alone. Smaller and mid-sized insurers must also be able to participate meaningfully in the market.

Reinsurance plays a critical role in enabling this. By transferring part of their risk, smaller insurers can support larger underwriting portfolios through reinsurance arrangements, freeing up capital and strengthening solvency. This allows them to expand their offerings and contribute to meeting national coverage objectives.

Rising healthcare costs remain a persistent challenge. Health insurance generated approximately USD 11.2 billion in premiums in 2024, representing around 55.5% of all insurance premiums in the country. This figure is expected to increase substantially by the end of the decade as coverage and utilisation grow.

Reinsurers support insurers beyond pure risk transfer. They contribute actuarial expertise, claims analytics, disease trend monitoring, and international benchmarking, all of which help insurers manage medical inflation, design sustainable products, and refine pricing assumptions. Alongside these efforts, standardised billing systems and clinical guidelines can further reduce cost volatility across the market.

As coverage expands to new population segments, the availability and quality of data become increasingly important. Limited historical claims experience for Saudi nationals under universal coverage places greater emphasis on actuarial modelling, predictive analytics, and scenario testing.

Reinsurers play a key role in this area, leveraging regional and global datasets, advanced actuarial techniques, and emerging tools such as AI-driven analytics to help insurers better understand risk, anticipate utilisation trends, and improve long-term sustainability.

Saudi Arabia is actively developing domestic reinsurance capability. Saudi Re already operates across more than 40 markets and remains the country’s principal local reinsurer. The local cession framework is designed to deepen this capacity over time.

At the same time, the government is encouraging international reinsurers to establish a presence in the Kingdom. Industry participants have noted that factors such as withholding tax treatment and regulatory complexity may influence Saudi Arabia’s relative attractiveness compared with established regional reinsurance hubs. Addressing these considerations could further strengthen the country’s position as a regional reinsurance centre.

A well-functioning reinsurance market benefits the entire healthcare ecosystem. For individuals, it allows insurers to expand coverage without pushing premiums disproportionately higher. It also absorbs the financial impact of very large or unexpected claims, supporting system-wide stability.

For insurers, reinsurance protects balance sheets and enables growth. For hospitals and clinics, a stable insurance market translates into more predictable and reliable payments.

Saudi Arabia’s transition toward universal health insurance represents one of the most significant healthcare reforms in the region. Reinsurance is central to making this transition work. It provides insurers with the capacity to grow, the tools to price risk more accurately, and the resilience to manage uncertainty.

As the Health Sector Transformation Programme continues to evolve, close collaboration between insurers, reinsurers, and policymakers will be essential to ensuring that universal coverage is both affordable and sustainable over the long term, for more information visit JLL Healthcare.