Global credit agency AM Best says UAE insurance policies typically exclude war-related risks, which helps limit losses for local insurers.
Standard insurance policies in the UAE typically exclude war-related risks, meaning losses for local insurers have remained limited.
“Standard insurance policies in the UAE typically exclude war-related risks, which are instead covered through add-on benefits. UAE insurers generally cede all this exposure to international reinsurers, and any increase in reinsurance costs is expected to be largely passed on to policyholders,” according to the latest research by AM Best on the UAE’s insurance market.
After the Middle East conflict escalated on February 28, involving the US, Israel, and Iran, the UAE and other Gulf countries came under Iranian drone and missile attacks, with air defence systems intercepting multiple projectiles across the region.
AM Best said that before the conflict began, UAE insurers were benefiting from favourable market conditions, with 2025 marking a return to strong technical performance after weaker results in previous years.
“Material rate increases, along with improved underwriting discipline, stronger risk-based pricing, and higher business volumes, contributed to better financial performance across most lines of business,” the agency said.
According to Badri Management Consultancy, UAE-listed insurance companies reported a 47 per cent rise in net profit to Dh3.7 billion ($1 billion) in 2025, compared to Dh2.5 billion the previous year. This growth was driven by stronger technical margins, supported by risk-based pricing, portfolio rationalisation, and regulatory oversight from the Central Bank of the UAE.
The top five insurers posted Dh2.7 billion in profits, up 29 per cent year-on-year, while smaller players recorded an even sharper 135 per cent increase, reaching Dh985 million. The rollout of mandatory medical insurance in the Northern Emirates also provided an additional boost to the sector.
AM Best added that war-related losses have so far remained limited. “Where losses have arisen, the impact on domestic insurers is largely muted due to the high use of facultative reinsurance and minimal retention,” it said, noting that reinsurance capacity remains available to domestic insurers.
However, analysts expect reinsurance renewal conditions to continue evolving, both in terms of policy terms and pricing, as insurers respond to ongoing geopolitical tensions and regional risk exposure.
The agency also warned that a rise in claims could expose primary insurers to counterparty credit risk through reinsurance recoverables. Still, it noted that UAE insurers usually work with financially strong reinsurance partners, helping reduce this risk.
Despite significant exposure to real estate and equities, AM Best believes domestic insurers’ balance sheets remain strong enough to absorb market fluctuations. While regional conflict adds macroeconomic uncertainty, its direct effect on core underwriting results has so far been limited, though the situation continues to evolve.
