Developing equitable car insurance for women in Saudi Arabia with Allied Cooperative Insurance Group

In June 2018, women in Saudi Arabia were granted the right to drive motor vehicles for the first when a long-standing ban was lifted by royal decree by King Salman.

This was a significant social change in Saudi Arabia and created a major challenge for the national motor insurance sector, which now needed to incorporate a significant number of new female drivers who had no claims history and hence were classified as first-time drivers with high insurance premium rates.

To tackle this challenge, ACIG partnered with IFAM researchers to analyse motor insurance data in Saudi Arabia since women first began to receive licenses in 2018, with a view to creating a system for fair car insurance pricing.

Within the global car insurance market, it is well established that the frequency of claims is similar for both men and women, with the severity of claims being lower for female drivers.

ACIG and IFAM worked together on collaborative research that compared first time male and female drivers, which was the point when the discrepancy in the insurance rates being offered to each gender in Saudi Arabia was most notable.

Their work looked at how to make the system fairer and more equitable over time for both male and female drivers, creating a merit-based system that would reward or penalise drivers in a fair way based on driving performance, as well as advising that the severity of insurance claims be factored into existing methodologies.

ACIG have already begun to implement changes to its policies based on the work by the IFAM team and the impacts of fair and equitable insurance premiums stemming from these changes are expected to spread across the insurance industry in Saudi Arabia over the coming years.

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