A growing number of individuals and businesses across the Gulf are facing increased financial vulnerability as rising insurance premiums widen the region’s long-standing protection gap, according to new industry analysis.
The “protection gap” — the difference between total economic losses and the amount actually covered by insurance — has become more pronounced in recent years, fueled by escalating policy costs, inflationary pressures, and climate-related risks.
Analysts say the situation is particularly acute in sectors such as health, property, and small business insurance, where premium hikes are outpacing income growth and operating margins. In some cases, companies and individuals are scaling back or forgoing coverage altogether.
“While awareness of insurance is increasing, affordability remains a critical barrier,” said Rania Abou Hassan, a regional insurance market analyst. “This leaves large segments of the population underinsured or completely exposed to risk.”
The Gulf Cooperation Council (GCC) countries have made significant strides in expanding insurance penetration, especially in health insurance, with regulatory mandates in the UAE and Saudi Arabia driving coverage. However, voluntary insurance products — including life, property, and business interruption policies — remain underutilized.
Global reinsurers, who support local insurers in absorbing large-scale risks, have also raised their rates in response to increased climate-related disasters and market volatility, adding further strain to local insurers’ pricing models.
Experts are urging policymakers and industry players to invest in education, offer more flexible micro-insurance products, and explore public-private partnerships to close the protection gap before it becomes a systemic economic issue.
“The growing gap threatens not just individual livelihoods but broader financial resilience,” said Khalid Al Mansoori, a senior executive in the regional insurance sector. “Bridging it must become a strategic priority.”
With economic diversification efforts underway across the region, industry leaders say protecting new sectors and investments from risk will be key to sustaining long-term growth.
