Kuwait’s new requirement for insurers and reinsurers to obtain a minimum credit rating of ‘BBB+’ could bolster confidence in the sector and support longer-term development, according to Fitch Ratings.

The regulation, issued by the Insurance Regulatory Unit (IRU) on January 15, mandates that insurance and reinsurance companies operating in Kuwait secure a rating of at least ‘BBB+’ from one of four specified credit rating agencies, including Fitch.

The rating must form part of annual submissions covering governance, risk management and financial stability, with documentation to be filed with the IRU by June 30 each year.

Although the regulation does not require ratings to be publicly disclosed, Fitch believes many companies may opt to publish them to enhance reputational benefits and transparency. Even where ratings remain private, the requirement is expected to provide policyholders and market participants with greater assurance that licensed insurers meet a defined minimum standard of financial strength.

The move builds on a series of reforms introduced in recent years. In 2022, the IRU implemented updated solvency margin and minimum capital requirements, alongside strengthened reporting standards. Additional measures have targeted compulsory motor insurance, including clearer policy disclosures and a QR code system aimed at reducing fraud.

Fitch considers Kuwait’s regulatory framework effective but still developing. The new rating threshold could encourage improved best practices across the market and potentially lead to consolidation if smaller or less sophisticated insurers struggle to comply.

However, Fitch notes that further clarity on implementation and enforcement will be needed to assess the full impact.

There are also potential risks. Insurers facing downward rating pressure could encounter regulatory sanctions or reduced broker support if they fall below the ‘BBB+’ threshold.

Kuwait’s insurance market remains modest in size, with total premiums of approximately USD2.2 billion in 2024.

The sector is dominated by Gulf Insurance Group K.S.C.P., which accounted for more than 60% of sector revenue.

As of early 2025, 34 insurers and reinsurers were licensed, including 18 conventional insurers and 16 takaful operators.