Saudi insurers urged to enter care provision as profit gap widens

Gap persists despite strong market growth.

Saudi Arabia's health insurers are being pressed to expand into care provision, as a persistent profitability gap with hospital operators is seen as structural rather than cyclical, according to L.E.K. Consulting.

L.E.K. Consulting said between 2016 and 2024, the kingdom's top five private providers posted operating margins of 16% to 22%, above the 16% global average for their peer group, whilst the top five insurers ranged between -4% and 6%, settling at about 5% in 2024, still below the 7% global benchmark.

The gap persists despite strong market growth. Total healthcare spending is forecast to hit $76b in 2026, growing roughly 7% annually since 2022, whilst gross written premium for private medical insurance nearly doubled to $10.4b in 2023 from $5.4b in 2018.

However, the report says fraud, waste, and abuse account for 10% to 12% of total claims, adding pressure on insurers to gain more control over care delivery rather than just absorbing costs.

L.E.K. recommends consultation and diagnostics as entry points rather than hospitals, citing lower capital intensity and lighter regulation.

Vision 2030 targets raising the private sector's share of healthcare delivery from 40% to 65% by 2030, with privatisation plans covering about 290 hospitals and roughly 2,300 primary health centres, whilst private insurance is projected to represent about 35% of total healthcare spending by 2026.

Some insurers have already acted. Tawuniya's Meena Health unit announced plans in 2024 to open 46 to 52 primary care centres by 2027, backed by a $133m (SAR500m) budget, whilst Bupa Arabia's CareConnect opened its first clinics in 2025.

Moreover, the report flags four risks for insurers pursuing integration—limited provider operating experience, regulatory complexity, cultural resistance from clinical staff and independent hospitals, and a fragmented provider market inflating acquisition valuations.

L.E.K. concludes the strategic window is narrow, warning that insurers who delay will face higher asset prices and weaker negotiating leverage as rivals build out captive provider networks first.