GCC insurers remain vulnerable to second-order effects from the Middle East conflict, according to AM Best in a new report.
However, strong performance and healthy risk-adjusted capitalisation leave many of them well-positioned to withstand geopolitical headwinds, although the impact of an extended conflict in the region could pose significant challenges.
In its Best’s Market Segment Report, “Market Segment Outlook: Gulf Cooperation Council Insurance” released on 27 July, AM Best said that it is maintaining its outlook for GCC insurance markets at 'Stable’.
Also noted by AM Best’s analysts is the segment’s reliance on reinsurance, primarily to support specialty, commercial property and engineering lines of business. Should attempts to de-escalate the US-Israel conflict with Iran prove unsuccessful, reinsurance renewals will be a critical inflexion point for the sector, with reinsurers possibly looking to reevaluate their risk appetites.
“This could lead to a reduction in available capacity, higher pricing, and changes to terms and conditions, exclusions and event limits,” cautioned AM Best.