GCC Insurance Sector Set for Stable Growth Amid Economic Expansion, Says Moody’s

The Gulf Cooperation Council’s (GCC) insurance industry is poised for steady growth over the next 12 to 18 months, supported by robust economic activity, rising non-oil investments, and expanding mandatory coverage schemes, according to Moody’s Ratings.

In its latest GCC Insurance Outlook, Moody’s said the sector’s stability will be driven by economic diversification initiatives and government-backed infrastructure projects, particularly in Saudi Arabia and the United Arab Emirates (UAE), which together account for nearly 80 percent of the region’s total insurance premiums.

The non-life segment—covering property, health, and motor insurance—represents more than 80 percent of total premiums and stands to gain from increased spending on construction, tourism, and manufacturing. “The industry will also benefit from the spread of compulsory insurance and rising demand for health and life cover,” Moody’s noted in its report.

The agency projected that the region’s real GDP will grow by around 4 percent in 2026, led by Saudi Arabia and the UAE, with Kuwait, Oman, and Qatar contributing to the momentum. Rising consumer awareness and reduced subsidies in sectors like utilities and education are also expected to fuel demand for life and savings products.

S&P Global Ratings has issued a similarly upbeat assessment, forecasting that the GCC’s Islamic insurance—or takaful—segment will expand by about 10 percent annually through 2025 and 2026.

Moody’s highlighted that overall profitability across the sector is improving, particularly after insurers in the UAE raised premiums in 2025 to offset heavy storm-related losses from the previous year. The ratings agency expects the industry to post “positive underwriting profit for the remainder of 2025 and into 2026.”

However, Moody’s cautioned that larger, well-capitalized insurers will continue to outperform smaller firms. Smaller players are likely to face mounting pressure from price competition, rising claims, and growing technology and compliance costs. The increasing dominance of online insurance aggregators is also pushing price-based competition, further squeezing margins.

The report warned that the sector’s exposure to equities and real estate heightens investment risks amid ongoing geopolitical tensions in the Middle East. “This increases the sector’s investment risk and magnifies its exposure to downside scenarios related to geopolitical tension,” Moody’s said.

Saudi insurers, in particular, may see weaker capital buffers due to slower profit growth and higher risk exposure, while UAE insurers are benefiting from improved profitability and premium adjustments.

Regulators across the GCC are tightening capital adequacy and risk management requirements, which Moody’s believes will accelerate consolidation, especially in Saudi Arabia where authorities have taken a stricter stance on compliance.

Despite these challenges, Moody’s maintained a stable outlook for the GCC insurance market, noting that consolidation among stronger players will “support the sector’s credit strength over time.”