Chief Executive Officer’s Review

I take great pride in presenting Bupa Arabia’s Annual Report for the financial year 2023, highlighting our financial results and achievements for the period under review. Along with the Board of Directors, I take this opportunity to thank the entire Bupa Arabia team members for their continued commitment to the Company, for their service dedication to our insured members and for delivering the “1Bupa Strategy” finale with record-breaking results for the year despite the challenges facing the sector.

Concluding “1Bupa Strategy” on a high note

Back in 2018, we developed a five year ‘1Bupa’ strategy which we then launched at the beginning of 2019 to re-energize the organization and deliver SR 1 billion of pre-zakat and tax profit by end of 2023. Despite the Covid-19 and post Covid-19 turbulence, we stayed the course and carried out excellent executions of the strategy streams. Five years later, Bupa Arabia recorded a finale year of robust set of financial results, with a 20.0% YoY increase in gross written premiums (GWP), and 15.2% YoY rise in profit before zakat and income tax to SAR 1.12 billion.

The impact of the 1Bupa strategy was broad-based and well beyond the financial outcomes. The growth was across all regions, across all customers segments, across internal organizational KPIs and earned Bupa Arabia various external recognitions amongst top 10 strongest and most valuable brands in Saudi Arabia. What a great foundation to base our next strategy phase upon.

Sector dynamics, challenges, and opportunities

The insurance sector is maturing, and signs of maturity can be seen everywhere. A new regulatory body (Insurance Authority – created end of 2023) that will review and issue new laws and regulations reviving the 25+ years old ones, the continued consolidation within insurance companies via M&As, opening up the provision sector to insurance companies to take part in the service delivery, more insurance products been mandated, moving to IFRS-17 reporting standards, and last but not least, no price wars.

Zooming in into health insurance specifically, it’s today the largest line of insurance with a share of +60%, the challenges are many and so do opportunities. The main challenges this line of business faces today are:

1. Regulatory challenges with chronic pain points that we are hopeful that most, if not all, will be addressed by the newly created Insurance Authority which replaced the previous dual-regulator setup. Some key regulatory challenges are:
   • Excessive levies and fees that are far beyond regional and international benchmarks.
   • Lack of enforcement. After nearly 25 years of implementing insurance regulations, we believe that only 70-75% of the mandated groups are enforced by end of 2023.
2. Medical inflation – the past two years have been exceptional with double-digit inflation in the healthcare services that ultimately impact the end customer. Key drivers of the medical inflation are:
   • Excessive operating margins by providers.
   • Predatory implementation and pricing of Article-11 which resulted in Ministry of Health being the 4th largest biller to insurance companies in just two years.
   • Abuse of rich insurance benefits specially with increased levels of automations that help systemize and scale such a wrong behavior.

As for the opportunities we see moving forward, on top of turning the above challenges into opportunities, the other key ones are:

1. Playing an active role in health provision. Following the removal of the bylaws article that prohibited insurance companies from provision end of 2022; we see an opportunity for insurers to test models of vertical integration to optimize and solve for “best health outcomes at the most efficient cost to serve.”
2. Acceleration of Vision 2030 projects executions.
3. Corporatization of MoH facilities under Health HoldCo as they could bring additional provision supply to the market – provided better service experience – to help rationalize the cost of private providers.

With technology transformation being pivotal to the overall business objective of caring for our members, Bupa Arabia’s technology strategy supports the business strategy and customer expectations of healthcare insurance, by understanding the business environment and long-term vision. Moreover, we adopted a customer-centric approach that differentiates and aligns the value proposition, customizes business processes, and drives better value, compared to our competitors.

In 2023, Bupa Arabia’s digital transformation strategy focused on data and analytics, security tools and protecting the core, whilst adhering to new regulations and insurance authorities, offering services that focus on the health state and journey of our members, and enhancing the Company’s working model and ecosystem to ensure that we deliver technological services in the best and fastest way to our customers.

Recognition of excellence

As in previous years, our commitment to excellence in the health sector garnered the Company a host of accolades, including Health Insurer of the Year by InsureTek, Best Health Insurance Mobile App by World Economic Magazine, Regional Healthcare Excellence by Digital Experience Show Middle East. The Company also received recognistion for Health Insurance for the Year, Best Customer Experience and Digital Excellence – by the Council of Health Insurance. Additionally, we also received recognition for Regional Healthcare Excellence and Best Digital Campaign from the Chartered Institute of Personnel and Development.

Fostering the best industry talent

Bupa Arabia maintains a human resources functional purpose of being the most admired healthcare company, by attracting, growing, engaging and retaining the best talent in the industry. We place high importance on employee career development and seek out best-in-class partners to collaborate with, ensuring that we deliver the best outcomes for our leaders.

We provide our employees with a plethora of benefits, including an employee benefits program in collaboration with suppliers, service recognition and the people care program, whilst also offering a flexible working model, mental health services and health awareness sessions. The success of our employee initiatives was evident in our biannual employee engagement survey: the People Pulse Survey, handled by the independent entity Glint, recorded an engagement score (e-sat) of 87% and 88% for May and November 2023 respectively, exceeding the target of 80% for both periods.

Looking ahead to 2024

We believe 2024 will be a transformational year for the entire insurance sector as we anticipate the issuance of the first upgrade to the sector’s regulations in more than two decades. We are hopeful they will address existing shortfalls and gaps.

We also anticipate a serious focus – from the regulator – on enforcement of the mandates, not only in health insurance but also in motor and other lines.

Last but not least, as we have announced on Tadawul, Bupa Arabia has established a full-owned subsidiary to provide healthcare services digitally and physically when needed. Bupa CareConnect has received licenses from both MoH and CHI. This is a step-change in the sector examining the full potential of vertical integration and population health management (PHM).

Tal Hisham Nazer
Chief Executive Officer and Executive Board Member