7.1 2025: A Year of Resilience and Transition
Throughout 2025, the global economy demonstrated significant resilience, navigating a landscape reshaped by shifting trade policies, geopolitical tensions, and the rapid integration of artificial intelligence. While global growth remained steady at an estimated 3.3٪, the year was marked by a successful, albeit gradual, stabilization of headline inflation, which declined to approximately 4.1٪. This progress has fostered a more balanced economic environment, although risks related to trade fragmentation and fiscal vulnerabilities remain a focus for the year ahead. Global GDP growth is projected to remain steady at 3.3٪ in 2026 and 3.2٪ in 2027, with headline inflation expected to reach 3.6٪ in 2026.
The Gulf Cooperation Council (GCC) economies proved robust, reinforced by a strategic acceleration in non-oil diversification and rapid digital innovation. The region’s transformation continues to drive significant demand for sophisticated risk and insurance solutions, particularly as Saudi Arabia and its neighbors solidify their positions as hubs for global trade and tourism.
Saudi Arabia’s economic momentum during the year saw real GDP growth reaching 4.5٪. This resurgence was primarily fueled by a 4.9٪ expansion in non-oil activities and a 5.6٪ increase in oil activities. Despite strategic adjustments in production, the Kingdom’s economic landscape reflects the ongoing success of Saudi Vision 2030 in fostering a diversified, resilient, and sustainable economy. Standard & Poor’s recently upgraded Saudi Arabia’s credit rating to A+ with a stable outlook, reflecting confidence in its economic diversification efforts.
7.2 Global Reinsurance: Capital Abundance and Market Dynamics
The global reinsurance sector reached a historic milestone in 2025, with total dedicated capital hitting a record high of approximately USD 805 billion by mid-year. This 4.8٪ increase – comprising USD 660 billion in traditional capital and record-breaking alternative capital performance – reflects increasing synergy in providing coverage for complex risks. Catastrophe bond issuances exceeded USD 25 billion, marking the first time this market has surpassed the USD 20 billion threshold in a single year.
The industry entered 2025 in a position of strength, with the market’s return on equity (ROE) estimated between 17٪ and 18٪. This sustained profitability is a result of disciplined underwriting and robust investment income bolstered by elevated interest rates. However, as the market enters 2026, premium rates are expected to moderate. This capital abundance and the transition from the “hard market” corrections of previous years move the industry toward a more balanced, yet highly disciplined, environment.
The Shifting Risk Profile
Global natural disasters in 2025 resulted in total economic losses of USD 260 billion. While this was the lowest since 2015, insured losses remained elevated at USD 127 billion, marking the sixth consecutive year insured losses exceeded the USD 100 billion threshold. Severe convective storms (SCS) alone accounted for nearly USD 61 billion in insured losses.
The MENA region continues to experience a shift in its risk profile. Following historic weather events in late 2024, there has been an increased focus on enhancing natural disaster coverage. This evolving exposure, alongside geopolitical tensions and shifting trade policies, underscores the necessity for advanced risk modeling and the integration of AI-driven forecasting and telematics to mitigate the financial impact of increasingly frequent climate-related and man-made events.
In light of these changes, the need to adapt to evolving market conditions has become increasingly evident, with greater emphasis on comprehensive underwriting and exposure management policies. At the same time, companies must seek opportunities to provide coverage and develop solutions that support economic growth while demonstrating their ability to facilitate and sustain commercial activity.
The KSA Insurance Sector: A Transformed Landscape
The approval of the National Insurance Sector Strategy (NIS) in January 2026 marks a defining chapter in the Kingdom’s economic future. Spearheaded by the Insurance Authority (IA), this roadmap seeks to expand the insurance market from X 66 billion in 2023 to over X 140 billion by 2030, effectively elevating the sector’s contribution to non-oil GDP to 3.6٪. The Kingdom is moving toward a more sophisticated, technology-enabled insurance ecosystem, supported by regulatory measures requiring insurers to retain 30٪ of reinsurance business with local reinsurers. Central to this transformation is the shift toward a Risk-Based Capital (RBC) framework and initiatives aimed at doubling the sector’s risk-based capital.
This new landscape is further defined by continued capital restructuring and a wave of mergers and acquisitions in 2025, resulting in larger, more resilient entities capable of supporting the Kingdom’s giga-projects. Investments from the Public Investment Fund (PIF) continue to amplify the sector’s economic impact, while innovation remains a priority through the introduction of new products such as employer’s default coverage and specialized surety bonds.
During the first nine months of 2025, the Saudi insurance sector witnessed a 12٪ increase in gross written premiums (GWP), indicating that while the market is expanding, it is not doing so profitably for all participants. The sector has seen a significant bifurcation in performance; the aggregate profit of the sector dropped 46٪ to X 1.86 billion for the first nine months of 2025, with profit after Zakat and tax falling 41٪ year-on-year to X 1.7 billion in Q3. While the “Top 5” companies maintained strength with a slight 1٪ growth to X 1.67 billion, insurers outside the top five saw a drastic 209٪ deterioration, swinging to a collective X 612 million loss. This downward pressure on profitability is primarily driven by intense price competition, especially within motor insurance, alongside rising underwriting costs that have left smaller players struggling to maintain necessary capital requirements.
Future Outlook
Looking forward, Saudi Arabia’s Vision 2030 is fueling a USD 1.3 trillion investment pipeline across real estate, infrastructure, and tourism sectors. With a target of 150 million annual visitors and a home ownership goal of 70٪ by 2030, these giga-projects are reshaping the Kingdom’s urban and commercial landscape.
The Saudi insurance market is poised for significant growth, with GWP projected to reach X 140 billion (USD 37 billion) by 2030, reflecting a CAGR of 11.34٪. Growth in 2026 and 2027 will be primarily driven by Vision 2030 initiatives, including preparation for Expo 2030 and World Cup 2034. The market is expected to see continued consolidation, with smaller firms either merging or being acquired by larger, more stable entities as the Insurance Authority (IA) enforces stricter regulations to improve market stability.
