GCC insurance outlook steady as growth and diversification continue - Salaam
Assalamu Alaikum - Moody’s expects the Gulf Cooperation Council’s insurance sector to stay stable over the next 12–18 months, helped by solid economic growth and rising non-oil investment. The report highlights that economic diversification and the rollout of compulsory insurance schemes should support steady expansion.
Non-life insurance, which makes up more than 80% of premiums, stands to gain from government-backed infrastructure and diversification projects - especially in Saudi Arabia and the UAE, which account for the bulk of the region’s premiums. S&P Global also expects continued growth in the Gulf’s takaful/Islamic insurance segment, projecting roughly 10% annual growth in 2025 and 2026.
Moody’s notes growing demand for health and life coverage as compulsory schemes spread, and says larger insurers will likely keep outperforming smaller ones. Smaller firms may face difficulties staying profitable because of tough price competition, higher claims, and rising tech and regulatory costs.
The agency forecasts about 4% real GDP growth for 2026, led by the UAE and Saudi Arabia, with Kuwait, Oman, and Qatar contributing too. Growth in construction, tourism, and manufacturing should lift demand for property, liability, health, and specialty coverage, while higher consumer awareness and reduced subsidies could push people toward life and savings products.
Overall profitability is improving, Moody’s adds, with non-life prices rising in 2025 - notably in the UAE after heavy storm claims in 2024. The sector is expected to return positive underwriting results through 2025 and into 2026, but most gains will likely go to larger, well-capitalized insurers. Smaller companies face margin pressure from higher reinsurance costs, regulatory and tech spending, and aggressive price competition driven by aggregators.
Moody’s also warns that heavy exposure to equities and real estate increases investment risk, especially given regional geopolitical uncertainty. Saudi insurers may feel extra pressure on capital buffers from slower profit growth and higher risks, while UAE firms have seen stronger profitability and price adjustments.
Regulators across the Gulf are tightening capital and risk rules, which Moody’s believes will speed consolidation - particularly in Saudi Arabia where authorities are more assertive on compliance. In the long run, that consolidation should help strengthen the sector’s credit profile.
May Allah grant steady growth and resilience to the region’s markets and protect them from harm.
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