https://arab.news/pkcyr
RIYADH: The Gulf Cooperation Council鈥檚 insurance sector is expected to remain stable over the next 12 to 18 months, supported by strong economic growth and rising non-oil investments, according to Moody鈥檚 Ratings.
In its latest GCC Insurance Outlook, Moody鈥檚 said economic diversification and compulsory insurance schemes are expected to underpin the sector鈥檚 growth.
The region鈥檚 non-life segment, which represents more than 80 percent of premium revenues, will benefit from government-backed infrastructure and diversification projects, particularly in 黑料社区 and the UAE, which together generate 80 percent of the GCC鈥檚 total insurance premiums.
S&P Global Ratings has similarly projected sustained expansion for the Gulf鈥檚 insurance industry, particularly within the Islamic segment, which it expects to grow by around 10 percent annually in 2025 and 2026.
In its latest report, Moody鈥檚 stated: 鈥淭he industry will also benefit from the spread of compulsory insurance and rising demand for health and life cover.鈥�
It added: 鈥淟arger insurers will continue to outperform smaller ones, which will struggle to remain profitable because of intense price competition, rising claims, and high technology and regulatory costs.鈥�
Moody鈥檚 forecasted real gross domestic product growth of around 4 percent for 2026, led by the UAE and 黑料社区, with additional contributions from Kuwait, Oman, and Qatar.
Expansion in construction, tourism, and manufacturing is expected to increase demand for property, liability, health, and specialty insurance, while greater consumer awareness and reduced subsidies in utilities and education are expected to boost demand for life and savings policies.
According to the report, 鈥淧rofitability is improving overall,鈥� with non-life insurance prices rising in 2025, particularly in the UAE, where insurers raised premiums following heavy storm-related claims in 2024.
Moody鈥檚 said the sector should post 鈥減ositive underwriting profit for the remainder of 2025 and into 2026.鈥�
However, the agency noted that large insurers will capture most of the profitability gains next year due to economies of scale, while smaller peers 鈥渨ill struggle to make an underwriting profit amid intense competitive pressure.鈥�
Increased reinsurance prices, regulatory expenses, and technology investments are squeezing margins for smaller firms, and the dominance of insurance aggregators is further driving competition based on price.
Moody鈥檚 also cautioned that GCC insurers鈥� high exposure to equities and real estate raises asset risks, particularly amid geopolitical uncertainty in the Middle East.
鈥淭his increases the sector鈥檚 investment risk and magnifies its exposure to downside scenarios related to geopolitical tension,鈥� the report said.
Saudi insurers face additional strain on capital buffers due to slower profit growth and higher risk exposures, while UAE insurers have benefited from stronger profitability and price adjustments.
Regulators across the GCC are tightening capital and risk requirements, which Moody鈥檚 expects will accelerate consolidation鈥� especially in 黑料社区, where authorities have taken a more assertive stance on compliance.
The agency added that while the sector鈥檚 outlook remains stable, market dynamics are shifting toward larger, better-capitalized players. Consolidation, it added, will ultimately 鈥渟upport the sector鈥檚 credit strength over time.鈥�