S&P Global Ratings (S&P) has projected that GCC insurers will sustain underwriting profitability in 2026 at a similar level to that in 2025, despite the ongoing Middle East military confrontation.
Elaborating on the reasons for this outlook, S&P says that regional trade disruptions and the risk of an increase in claims will mostly affect marine, aviation, energy, and cyber business lines. However, the global credit rating agency adds that it does not believe that GCC insurers have significant exposure to war-related claims, since standard insurance policies generally exclude such risks.
In addition, specialised insurance policies that cover war-related risks are usually fully reinsured in the global reinsurance market. As a result, GCC insurers writing this type of business tend to have relatively low and manageable net exposures, if they have any at all.
Motor
While the short-term disruptions appear broadly manageable, a lengthier closure of the Strait of Hormuz could cause major supply chain disruptions and increase the cost of spare car parts and other goods. This could particularly affect motor lines, which contribute approximately 20%-30% of the GCC insurance sector's total revenue. However, a temporary slowdown in business activity and a sharp decline in visitor numbers may reduce the number of vehicles on the road. This could lead to a decrease in motor claims and offset potential inflation in overall claims.
S&P anticipates that insurers' operating performance will likely remain weaker in Saudi Arabia than in other GCC markets, as lower-margin medical lines represent a larger share of their overall business. This would be despite some rate increases in motor lines in Saudi Arabia to compensate for weak results in these lines in 2025.