SAUDI ARABIA LOOKS TO PRIVATE HEALTH INSURANCE

Officials in Saudi Arabia are calling for the country to liberalise the licensing of private health insurers. It is estimated that such measures could cut annual government health spending by as much as SAR6bn (US$1.6bn), an increasingly attractive option in light of the country's rapidly rising population and growing dependence on imported, high-cost treatments.

Since 1999, 30 insurance companies have applied for licenses but only 19 of these have reached an advanced stage in the process. Local observers expect the private health insurance market to triple to SAR24bn (US$6.4bn) in the next 10 years.

Some 75% of healthcare spending in Saudi Arabia is focused on the public health sector, which also accounts for over 80% of bed capacity. The Saudi government has been keen to encourage the expansion of the private sector, recently approving loans for the construction of a number of private hospitals. However, with no formal insurance regulator and no reinsurance industry, the private sector is still in its infancy.

Although Saudi Arabia is a wealthy country -- and has been able to invest soaring oil revenues in its health service -- a growing population and higher incidences of "Western" diseases, such as obesity and high cholesterol, is putting pressure on health provision.

Local data suggests that health expenditure grew 50% in 2005, but such growth is unlikely to prove sustainable without private finance. However, some fear that the population's dependence on free healthcare will make the case for out-of-pocket private insurance a difficult proposition.