The health insurance Market in Saudi Arabia Witnesses a High Concentration

RIYADH — The General Authority for Competition (GAC) announced that health insurance market in Saudi Arabia is witnessing a high concentration, as the market share for the biggest 3 companies reached 83% of the market, and this constitutes concerns on competition.

GAC’s announcement came while revealing the competitive evaluation of the health insurance market in the Kingdom and its most notable concerns about the competition levels.

The private health insurance covers about 30% of the working population, GAC said, while confirming that there has been a huge expansion in the health insurance sector recently.

The expansion came especially after the imposition on companies to provide a mandatory health insurance for workers and their families in the private sectors.

The GAC stated that the choice depends on several factors regarding the prices of health insurance policies or products, which include the entitlements and characteristics of the main insurance policy, the insurance companies’ strategy that issues insurance and the internal cost structure.

With regard pricing of the health care services, the GAC stated that this came as result of the individual contract negotiations between the health insurance companies and the health care services providers.

This is also a result of some regulatory oversight in the price negotiation process, GAC added, noting that there is no unified approach to cost estimation.

GAC said that the real price of the provided health care services differs from the prices that the Ministry of Health approves to the health care providers.

The difference between the prices comes due to the discounts obtained by some of the health insurance companies, where its total would reach 50% or 60% in some cases.

The GAC’s study has also revealed that the companies did not record any income in the past years, which note that the current competition may be vulnerable to market shocks.

The number of the main participants is limited, which may transfer the market into monopolistic competition, and that would result in the increase of the prices and lack of innovation.

GAC also added that the current competition is fragile, which might act as a magnet for the participants in the market to replace the current equilibrium of competition with explicit or tacit collusion, and through which, it would lead to increase in prices.

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HBC Editors
HBC Editors
HBC editors are a group of healthcare business professionals from diversified backgrounds. At HBC, we present the latest business news, tips, trending topics, interviews in healthcare business field, HBC editors are expanding day by day to cover most of the topics in the middle east and Africa, and other international regions.

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