GCC insurers face uneven 2025 outlook as growth lifts large players

Dubai: Insurers across the Gulf are expected to post overall underwriting profits in 2025, driven by strong economic performance in the UAE and Saudi Arabia and a continued push by governments to broaden non-oil revenue streams. Moody’s Investors Service says growing demand for health and life coverage, alongside the introduction of more mandatory insurance schemes, will help support top-line growth across the region.

But despite the positive backdrop, the credit ratings agency warns that not all firms will benefit equally. Larger, well-capitalised insurers are better positioned to absorb rising operating costs and navigate intense price competition, while smaller players face a tougher path ahead.

Compulsory coverage boosts top line

Moody’s notes that the spread of mandatory insurance—particularly in motor, health, and life segments—will help underpin revenue growth across key GCC markets. With robust GDP forecasts led by the UAE and Saudi Arabia, insurers are likely to benefit from new policyholders entering the system as formal employment and population growth expand.

The report adds that, even with macroeconomic uncertainty and potential geopolitical flare-ups, sector-wide underwriting profits should remain in positive territory next year.

Pressure builds on subscale insurers

Still, Moody’s cautions that smaller insurers are increasingly vulnerable. Many operate with thin profit margins and face rising costs related to reinsurance, regulation, and digital infrastructure. The return of aggressive price competition—following a two-year upswing driven by storm-related claims in 2023–2024—further challenges their ability to remain profitable.

The likely outcome, Moody’s suggests, is continued consolidation across the sector, especially in Saudi Arabia, as firms seek scale and stability.

Investment risk remains elevated

Insurers in the region also face higher-than-average investment risk due to the composition of their portfolios. Moody’s says many continue to allocate heavily to domestic equities and real estate, exposing them to volatility tied to regional market swings and broader macroeconomic or geopolitical shocks.

These allocations reflect both a preference for higher-yielding assets and limited availability of local fixed-income instruments.

Bottom line

GCC insurers are set for a mixed year in 2025. While large players should ride the region’s economic momentum to stronger profits, smaller firms may find themselves squeezed by cost pressures and heightened risk exposure—factors likely to drive further industry consolidation.