Swiss Re projects that the Middle East and Pakistan (MEP) region will see real GDP growth of 2.8% in 2025, driven by a gradual reversal of oil production cuts and ongoing economic diversification strategies.
Despite this outlook, the global economic environment presents downside risks, particularly from policy uncertainty and potential recession in the United States, which may have knock-on effects across international markets.
Insurance industry growth in the MEP region is expected to continue, supported by broader economic expansion and structural investments. According to Swiss Re, motor and health insurance remain dominant, but new activity in real estate, infrastructure, tourism, and technology is expanding the risk landscape.
Total insurance premiums in the region are forecast to increase by 5.4% in real terms in 2025, following a peak of 8.7% growth in 2024. Non-life premiums are projected to rise by 6%, reflecting developments such as mandatory health coverage initiatives in Saudi Arabia and the UAE, along with pricing adjustments in catastrophe-exposed portfolios.
Back in November, insurers in Saudi also notably projected improvements in their financial performance following the implementation of a new mechanism requiring a portion of reinsurance premiums to remain within the local market.
The Saudi Insurance Authority introduced the measure, which seeks to strengthen the role of domestic reinsurance firms in managing insurance risks within Saudi Arabia.
Saudi Arabia’s insurance market is expected to expand at a compound annual growth rate of 5.2% through 2028, with its size forecast to reach SR83.7 billion (US$22.28 billion). This marks an increase from SR68.3 billion in 2024.
Swiss Re notes that growth in the life insurance segment in the MEP region will be more moderate, with real-term premium increases expected at 2% in 2025. While the overall volume of premiums is rising, market profitability may remain constrained due to price competition in motor insurance and higher health claims.
Volatile financial conditions and lower interest rates may further pressure investment returns, particularly affecting life insurers.
The medium-term outlook remains constructive, Swiss Re observes, due to favorable regulatory changes, increasing urbanization, and population growth. Advances in automation and artificial intelligence are also reshaping how insurers operate, creating opportunities for enhanced efficiency and more tailored services. These same developments, however, also increase the region’s exposure to cyber threats.
The cost and frequency of data breaches reached record highs in 2024, and as digital infrastructure continues to expand, cyber risk continues to grow. The region still faces a significant cyber insurance gap, even as pricing declines in response to increased underwriting capacity.
Swiss Re highlights the region’s growing vulnerability to natural disasters as another major factor shaping insurance demand. In April 2024, extreme rainfall across the UAE, Oman, and neighboring countries resulted in economic losses of US$8 billion, with insurance covering US$3 billion.
As climate change increases the frequency and severity of floods and heatwaves, investment in adaptation measures – including land-use planning, drainage systems, and early warning infrastructure – will be critical. The insurance sector, Swiss Re concludes, plays an essential role in addressing the residual risks that remain despite mitigation efforts.
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