1. Total debt collected in KSA is expected to grow at a CAGR of 15% between the period of FY’21 and FY’26.
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The average ticket size for the industry is ~ SAR 8,000. Financing segment account for majority of debt collected, however, the non-finance segment has major share in total number of cases settled as the non-finance segment has a low ticket size. The major source of revenue for debt collection companies is the commission charged on recovered amount. Providing credit reporting services is a secondary source of revenue for the companies. Growing at a significant pace due to the rise in digital collection techniques, increase in use of customer self-service (CSS) platforms, increasing use of AI and ML for recovery predictions, training collection agents to handle complex cases, the market is expected to grow at a CAGR of 15% in the next five years.
2. Net claims incurred by insurance companies in KSA stood at ~ SAR 6 Bn in 2021, witnessing a growth rate of 20.4% in FY’21.
The net claims incurred by insurance companies in KSA witnessed a growth rate of 20.4% in 2021. Claims in motor, property/fire and accident & liability insurance are the major incurred claims that are outsourced to debt collection companies by insurance companies. Although the net claims incurred by insurance companies witnessed a dip in 2020 due to COVID-19, it grew in 2021.
3. Motor Insurance claims form ~ 95% of net claims incurred by insurance companies.
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Motor Insurance claims contribute most of net claims incurred by insurance companies, thereby creating market opportunity for debt collection companies, followed by property/fire insurance and accident & liability insurance. Net claims in motor insurance and accident & liability insurance witnessed considerable growth in 2021 after declining in 2020 due to COVID-19.
4. NPLs as % of total gross loans for Saudi Banks is relatively higher than that of other MENA countries like Djibouti, Israel and Kuwait..
The total NPLs by Saudi Banks as % of total gross loans stood at 2.18% in 2020. Total non-performing loans by SAMA licensed Saudi banks stood at ~ SAR 31 Bn in 2021 declining by 3.3% over the previous year. NPLs by Saudi banks as % of total gross loans have witnessed steady rise over the last five years thereby creating market opportunity for debt collection companies catering to the financing segment as around 75% of debt collection is outsourced to third party collection agencies.
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