(BUSINESS WIRE) -- AM Best is maintaining its stable market segment outlook for the insurance markets of the Gulf Cooperation Council (GCC) – comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The maintenance of the stable outlook reflects the GCC insurance market’s solid footing entering 2023; however, the weight of headwinds facing the market is increasing.
A new Best’s Market Segment Report, “Market Segment Outlook: Gulf Cooperation Council Insurance,” notes that the positive factors underpinning the stable outlook for the GCC include the regional resilience to challenging global macroeconomic conditions as buoyant oil prices contribute to continued fiscal surplus across the region.
In addition, the report highlights opportunities for continued insurance sector growth, as economies strengthen, new insurable risks enter the market and product offerings diversify through the enforcement of mandatory insurance covers.
Over the longer term, the report notes that increasing merger and acquisition activity in the region has the potential to improve market profitability and reduce price competition.
Near-term headwinds for the segment include intense competition that is driving pricing pressure and threatening margins, as well as supply chain disruptions and increasing inflationary pressures.
AM Best’s report also notes that hardening reinsurance market conditions may impact business models and margins for those with high reinsurance utilisation.
Furthermore, increasing incidences of weather-related losses, particularly from flood events, continue to test insurers’ risk management capabilities. Although AM Best recognises exposure is not homogenous across the region, the increased frequency and severity of events threatens underwriting margins.
To access a complimentary copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=329388.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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