Rising geopolitical tensions have increasingly affected insurance markets across the GCC, driving stronger demand for specialty insurance products such as war-risk, marine, political risk, and cyber insurance, according to Dubai-based investment banking advisory firm Alpen Capital.
Insurers have responded quickly to the situation. For example, in March 2026, insurance companies in Bahrain started offering war risk coverage for the first time, following the outbreak of the Iran War. In the UAE, Orient Insurance has launched four comprehensive war risk protection solutions, namely, Marine War on Land, Marine Cargo War Risks, and Political Violence Insurance for Personal Vehicles and for Residential Units.
In its report titled “GCC Insurance Industry”, Alpen Capital says that, notably, maritime war-risk premiums for vessels transiting high-risk waters like the Strait of Hormuz have skyrocketed from 0.2% to 1% of a ship's value, translating to a jump from $200,000 to $1m for a $100-m tanker. This has drastically inflated shipping costs and prompted logistics giants like DP World to introduce tailored cargo insurance programmes. The conflict has also forced airlines to reroute flights, raising aviation insurance costs. Furthermore, prolonged geopolitical instability threatens to delay large-scale regional infrastructure projects and dampen property and casualty (P&C) insurance lines.
Industry experts have highlighted that although marine and aviation reinsurance lines are among the most exposed during conflict, the war could trigger multiple simultaneous claims across segments, potentially exhausting insurer and reinsurer limits.
Underwriting
Across the GCC, geopolitical risks around the Strait of Hormuz are increasing pressure on underwriting profitability and risk exposure management for insurers. Any escalation in geopolitical risks across the region could also have an impact on investment returns and credit risk for insurers to remain moderate-to-high over the medium term. This is likely to weaken regional growth, while also weighing on insurance demand for P&C lines, such as construction, marine and energy being affected the most.
While net exposure accumulation remains manageable due to high reinsurance dependence, reinsurers may reassess risk appetite through higher pricing, tighter terms, and adjusted commission structures if the ongoing regional conflict continues to persist. Moreover, with the current norms for investment and interest rates unlikely to decline, the cost of capital is expected to remain high for reinsurance companies.
The industry remains exposed to intense competition, pressuring the sector's profitability. While softer investment returns are likely to dent income, margins are being further pressed amid rising reinsurance costs and high operational expenses.
GCC insurers also face investment risk due to the composition of their portfolios. Several players continue to allocate heavily to domestic equities and real estate, exposing them to regional market and broader macroeconomic volatility, as well as geopolitical shocks.
Projections
Despite the impact of the Middle East conflict, the GCC insurance market is projected to grow at an annualised rate of 4.9% to $61.8bn in 2030 from $48.5bn in 2025.
Alpen Capital says that the region’s sector is expected to remain on a steady growth trajectory underpinned by a combination of sustained increase in population, increasing urbanisation rate (~80%), evolving economic dynamics, higher regulatory oversight and growing awareness about the benefits of insurance across business lines.
Additionally, planned large-scale infrastructure development projects across the GCC will also facilitate the growth of the sector. Increasing government-led investments across non-oil sectors such as construction, tourism and manufacturing are driving economic diversification and expanding the base of insurable assets across the region. The continued expansion of compulsory insurance lines and rising demand for protection cover for motor and property lines following recent weather-related losses are expected to further support insurance uptake in the region.