The health insurance market in Saudi Arabia is highly concentrated

RIYADH – The General Authority for Competition (GAC) announced that the health insurance market in Saudi Arabia is highly concentrated as the market share of the top 3 companies has reached 83% of the market, raising competition concerns.

GAC’s announcement came as the UK’s competitive assessment of the health insurance market and its most notable concerns over the level of competition were revealed.

Private health insurance covers about 30% of the working population, GAC said, while acknowledging that there has been a tremendous expansion in the health insurance sector recently.

The expansion came notably following the obligation for companies to provide compulsory health insurance for workers and their families in the private sector.

The Federal Audit Office found that the choice depends on several factors related to the prices of health insurance policies or products, including the claims and characteristics of the main insurance policies, the strategy of the insurance companies issuing insurance, and the internal cost structure.

With regard to the pricing of health services, the Federal Court of Auditors explained that this resulted from the individual contract negotiations between the health insurance companies and the service providers.

This is also the result of some regulatory oversight in the price negotiation process, GAC added, noting that there is no one-size-fits-all approach to cost estimation.

GAC said the actual price of healthcare services provided differs from the prices the Department of Health approves for healthcare providers.

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

The GAC’s study also found that the companies have not reported any revenue for the past several years, indicating current competition may be vulnerable to market shocks.

The number of main participants is limited, which can turn the market into monopolistic competition, which would lead to an increase in prices and a lack of innovation.

GAC added that current competition is fragile, which could act as a magnet for market participants to replace the current competitive balance with express or tacit collusion, thereby leading to price increases.

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