News MiddleEast14 May 2018

Saudi Arabia:2020 Financial development plan aims to boost insurance

14 May 2018

The Saudi government-sponsored Financial Sector Development Programme 2020 seeks to enforce mandatory vehicle and health insurance and facilitate mergers and acquisitions within the insurance sector to increase its scale and solvency.

The Saudi Council of Economic and Development Affairs (CEDA) last week approved the 2020 Programme, which is one of the main schemes to achieve goals of the Saudi Vision 2030, reports the Saudi Press Agency.

The 2020 Programme is underpinned by three main pillars: enabling financial institutions to support private sector growth, ensuring the formation of an advanced capital market and promoting and empowering financial planning.

Through its first pillar, the 2020 Programme will work on a number of Vision 2030-related initiatives, such as enabling new types of players to enter the market, incentivising the financial sector to finance small and medium-sized enterprises (SMEs) and driving toward a cashless society.

These initiatives involve a number of measures, including revising and enhancing existing laws and regulations, incentivising merchants and citizens to adopt e-payment solutions, and promoting the insurance sector.

The second pillar will allow the programme to make the Saudi financial market more attractive to local and international investors through a number of initiatives that will see more diversified investment products and developed legislation.

The programme will also encourage the privatisation of some state-owned services and entities, further deepening the equity market and increasing market capitalisation meanwhile improving service quality and spending efficiency.

The third pillar focuses on boosting both the demand and supply of savings to bolster the kingdom’s savings ecosystem. This involves creating incentives to offer a diverse range of lucrative and safe savings products and, at the same time, increasing awareness and promoting financial literacy and planning.

A number of the planned savings products will be backed by the government and designed to help citizens achieve certain long-term goals, such as their children’s future expenses, supplementary retirement income, and affordable home ownership.

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