The Saudi Arabia Insurance Authority announced that a risk-based capital framework will become the solvency standard for insurance and reinsurance companies from Jan. 1, 2027, replacing the current framework. Capital requirements will reflect the nature and scale of each company’s risks, and firms will be permitted to use the standard formula or an approved full or partial internal model. The framework also allows subordinated debt issuance to meet capital requirements and support business growth. The framework is broadly aligned with international practices such as Europe’s Solvency II regime but adapted to the Saudi insurance market. It supports the National Insurance Sector Strategy’s target of increasing sector risk-based capital from SAR 25 billion to SAR 50 billion by 2030. During the parallel implementation phase in 2026, companies must calculate solvency under both the new and current frameworks using the authority’s guidance manual. Boards and relevant risk, finance, underwriting and actuarial functions are expected to assess the financial, operational and strategic effects and prepare for the transition.
2026-04-05Saudi Arabia Insurance Authority
Saudi Arabia Insurance Authority announces risk-based capital framework effective January 2027
The Saudi Arabia Insurance Authority will replace the current solvency regime with a risk-based capital framework from Jan. 1, 2027. Insurers and reinsurers must calculate solvency under both frameworks during 2026 and may use the standard formula or an approved internal model. The framework also permits subordinated debt issuance to support capital requirements and growth.