RIYADH: Insurers across the Gulf are expected to maintain stable credit profiles despite the ongoing Middle East war, with strong capital buffers helping absorb market volatility and limiting exposure to war-related claims, according to S&P Global Ratings.
In a report, the agency said most rated insurers in the Gulf Cooperation Council have sufficient financial strength to withstand near-term shocks because claims linked to the conflict are either heavily reinsured or excluded under standard policies.
The rating agency, however, warned that there could be a slowdown in revenue growth for most GCC insurance markets in 2026, following double-digit growth in recent years.
The analysis added that the extent of the slowdown will likely vary by market and depend on the duration of the war.
This comes after US-based credit rating agency AM Best said earlier in March that the immediate impact of the ongoing Middle East conflict remains manageable for global reinsurers, while warning that a prolonged crisis could challenge the sector’s resilience.
In its latest report, S&P Global Ratings credit analyst Emir Mujkic said: “We expect that our ratings on GCC insurers will remain broadly stable in the short-to-medium term.”
He added: “This is thanks to robust earnings generation in recent years, which has contributed to a significant buildup of capital buffers.”
S&P Global added that it is still too early to assess the full financial impact of the war in the Middle East on the GCC insurance sector, given the rapidly evolving situation and uncertainty over how long the conflict will last.
The agency’s base-case scenario remains that the military confrontation will be relatively short-lived, with the most intense phase lasting around two to four weeks, although broader spillovers and intermittent security incidents could extend beyond that period.
Earlier this month, S&P Global said in a separate report that banks operating in the Gulf region are expected to remain resilient in the short term because of strong financial buffers.
The maritime insurance industry has been forced to make changes to its offerings in light of the conflict.
On March 5, Reuters reported that Angus Blayney of Gallagher said London insurers were still offering cover, but at sharply higher premiums depending on cargo, vessel type and route.
In a report, Honour Ocean, China’s largest freight forwarder, said that tensions in the Middle East region have added shipping costs from China by adding war risk surcharges, rerouting vessels, and increasing insurance premiums.
According to the report, a war risk surcharge can add $50-$200 per Twenty-foot Equivalent Unit on shipments, contributing to higher freight rates and potential delays, impacting businesses reliant on China-Middle East trade routes.
Earlier in March, the US International Development Finance Corp. said that it has deployed maritime reinsurance, including war risk, in the Arabian Gulf region to stabilize commerce.
This reinsurance facility will insure losses up to about $20 billion “on a rolling basis” and is applicable only to vessels.
