GCC Insurers Set For Stable Growth, But Smaller Players Under Pressure

However, the agency said smaller insurers will face mounting pressure from price competition, rising costs and tighter regulatory demands, leading to further consolidation.

Moody’s expects GCC economies to achieve real GDP growth of around 4 per cent in 2026, driven by investment in large government-backed diversification projects across sectors such as construction, tourism and manufacturing.

These developments, led by the United Arab Emirates and Saudi Arabia, are expected to fuel demand for a broader range of insurance products, including property, liability and specialist cover, while gradually increasing the region’s still-low insurance penetration rate.

Profitability in the non-life sector, which accounts for more than 80 per cent of GCC insurance premiums, has improved this year, aided by price increases in markets such as the UAE following heavy storm-related claims in 2024.

The spread of compulsory insurance and greater consumer awareness of financial protection are also expected to sustain underwriting profits into 2026.

Small insurers face consolidation pressure

Despite the improved environment, Moody’s said smaller insurers are struggling to maintain profitability due to intense competition and higher costs for reinsurance, compliance and technology.

Larger players, benefiting from economies of scale, are likely to capture most of the sector’s earnings growth. The rise of online aggregators and insurance brokers, which steer customers toward lower-cost products, is adding further competitive pressure.

The report highlighted that GCC insurers’ growing exposure to higher-risk investments, such as domestic equities and real estate, leaves them vulnerable to geopolitical and market volatility. Although capital rules limit such exposures, some insurers have received exemptions to retain legacy holdings, particularly in the UAE, increasing their market risk.

In Saudi Arabia, capital buffers have weakened due to slower profit growth and higher risk exposure, while UAE insurers have strengthened their positions through better pricing and broader compulsory coverage. Across the region, regulators are tightening risk and capital standards, which could push smaller firms toward mergers or exits.

Moody’s said this consolidation trend would ultimately enhance the sector’s resilience and credit strength.