GCC Insurance Sector Outlook Stable on ‘Good’ Economic Growth: Moody’s

Solid economic growth linked to government investment in non-oil-related sectors will over the next 12 to 18 months support the profitability of GCC insurers, according to Moody’s Ratings.

The industry will also benefit from the spread of compulsory insurance and rising demand for health and life cover, Moody’s said in a report yesterday.

Larger 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.

Some of the smaller insurers will see their solvency come under pressure as a result, leading to continued consolidation.

Some GCC insurers' significant reliance on relatively high risk investment assets also makes them vulnerable to geopolitical tensions in the Middle East.

“Our analysis focuses primarily on the GCC non-life sector, which accounts for over 80% of region's premium revenues, and on Saudi Arabia and the United Arab Emirates (UAE), which generate a combined 80% of the region's insurance premiums,” Moody’s noted.

Meanwhile, Moody’s expects GCC countries to achieve good real GDP growth of around 4% in 2026, led by the region's dominant economies United Arab Emirates (UAE, Aa2 stable) and Saudi Arabia (Aa3 stable).

In both of these countries as well as in Kuwait (A1 stable), Oman (Baa3 stable) and Qatar (Aa2 stable), investment linked to large government-backed diversification projects will boost growth in non-oil sectors such as construction, tourism and manufacturing.

The expansion of these sectors will drive demand for a broader range of insurance, including property, liability, health and specialty cover.

This will increase the GCC region's relatively low insurance penetration rate (premiums as a percentage of GDP) and help correct local insurers' bias toward medical and motor policies.

A gradual phase out of subsidies for utilities and education encourages consumers to actively manage their finances and to avail insurance as a wealth management tool, thereby supporting demand for savings and protection insurance.

So whilst overall life insurance accounts for less than 20% of total premiums, demand for the life segment is also picking up.

GCC non-life insurance prices have improved in 2025, helped in the UAE by insurers raising prices in response to outsized storm damage claims last year.

The spread of compulsory insurance in several GCC countries, which along with increasing consumer awareness of insurance products, should result in positive underwriting profit for the sector as a whole for remainder of 2025 and into 2026 as well as in the longer term, Moody’s noted.

According to the report, large GCC insurers benefiting from economies of scale will account for the lion's share of profitability improvements next year. Their smaller peers, in contrast, will struggle to make an underwriting profit amid intense competitive pressure, exacerbated by rising claims costs, increased regulatory expenses and higher reinsurance prices.

Furthermore, the extent of investment in technology required to remain competitive continues to rise, squeezing profits for subscale insurers.

Competitive pressures in the GCC market are amplified by the central role in the distribution chain of personal insurance brokers and aggregator platforms, which channel business toward the lowest cost operators, Moody’s noted.