Credit ratings agency Fitch Ratings said the broader Europe, Middle East and Africa insurance landscape will remain on a stable footing in 2026, supported by solid operating performance, corporate capital and continued momentum generated by new business.
Fitch Ratings said that despite weak economic growth, unstable financial markets and some pricing pressures, conditions in the region are stable enough to justify a “neutral” outlook. High reinvestment yields remain the main stabilizing factor for profitability, while both life and non-life insurers have benefited from past improvements in capital buffers.
Fitch notes that savings and pension inflows continue to grow at a steady pace, mainly as customers become more cautious in the face of ongoing macroeconomic uncertainty.
In Italy, this shift has translated into a “neutral” outlook for life insurance after a period of improvement, with profitability supported by stable sovereign yields and continued fee-driven revenue.
Fitch expects premium growth in the non-life insurance market to slow compared with recent years as the pace of repricing begins to stabilize. Even so, underwriting discipline, good investment returns and cost-efficiency measures are expected to help maintain healthy operating profits.
The German non-life insurance sector has also been revised to ‘neutral’, reflecting Fitch’s view that profitability will remain stable despite slower revenue growth. In France, the insurance sector remains resilient, benefiting from disciplined underwriting and strong investment returns, while macroeconomic volatility and competitive pressures remain.
The outlook for the London market has deteriorated due to sharply weaker interest rates due to increased competition, which Fitch expects could put further pressure on margins. Combined ratios are expected to edge slightly higher, but premium volumes will still edge up as additional capital, both traditional and alternative, continues to flow into specialty product lines.
Good investment performance provides some offset, while ongoing modernization programs across the market remain central to achieving long-term efficiencies. Fitch draws attention to the rising frequency of moderate natural events, which complicates modeling and annual earnings patterns.
The agency emphasized that strong industry-wide capital can provide a buffer against asset volatility, credit losses and major insurance events. Still, falling asset values, rising default rates and premiums lagging claims inflation pose significant risks. Investor caution may also impact life sector revenues, while climate-related risks could increase earnings volatility and challenge long-term insurance capabilities in parts of the region.
Customer behavior across Western Europe has shifted towards greater interest in protection, retirement planning and stability-oriented savings products. Competitive pressure is intense, and insurance companies are investing heavily in technology upgrades, data systems and regulatory compliance.
These efforts improve the cost base in the short term but are considered critical to long-term competitiveness and risk management. Fitch noted that regulators are increasingly concerned about credit risk and the transparency of valuation methodologies as companies expand into less liquid assets.
Fitch observes that in the Netherlands, both life and non-life insurers enter 2026 with stable fundamentals. The transition of state pension systems to defined contribution structures is increasing demand for flexible retirement arrangements, including products that facilitate gradual withdrawals of income and the transfer of assets from legacy plans.
Dutch life insurance companies still rely heavily on traditional investment portfolios and strict cost management. While Fitch highlighted persistently low delinquency rates and strong performance during stress conditions, mortgages and real estate loans remain core to its investment book. In non-life insurance, the concentrated market structure supports tight pricing. Weather-related claims have become more frequent, but reinsurance continues to absorb extreme swings.
In the UK, the outlook for the life insurance industry remains positive. The agency expects bulk annuity deal flows to remain strong despite fierce competition putting pressure on margins. Retail and workplace savings also continue to expand, driven by increasingly sophisticated digital platforms.
That’s despite Fitch Ratings expecting a modest decline in capital strength across the industry as companies increase allocations to private credit and other long-dated assets. Regulatory teams are paying close attention to asset valuations, liquidity surveillance and funding reinsurance structures, with upcoming stress test results expected to guide regulatory priorities in 2026.
For UK non-life insurers, Fitch expects vehicle pricing to rise after production cuts in 2025 lead to tight margins. Claim costs related to repairs, theft and parts availability continue to rise. Home insurance appears to be normalizing after various pricing changes, but profitability remains fragile and vulnerable to severe weather.
Consolidation remains a defining theme, with Aviva’s acquisition of Direct Line Group most clearly illustrating this. Fitch Ratings believes that scale advantages in distribution, data and cost efficiencies favor large operators, while investment returns help maintain an overall stable industry outlook.
Türkiye’s non-life insurance industry continues to maintain positive growth momentum, although the pace of growth is slowing as inflation cools. Fitch Ratings believes investment income will once again drive industry profitability, offsetting significant technology deficits, particularly in automotive third-party liability, where regulatory tariffs lag claims inflation.
Recent indexation moves have alleviated imbalances but failed to address fundamental pricing gaps. Tighter regulation has improved capital resilience, and Fitch Ratings expects this progress to continue. Earthquake risk is still transferred mainly through national pooling systems and international reinsurance partners.
Life and non-life activities in Kazakhstan continue to grow steadily. Fitch Ratings highlights that life insurance is expanding rapidly due to rising revenues and low market penetration, despite strong competition from bank savings products. The ability of policyholders to transfer pension annuity assets between providers increases competition.
The profitability of the entire industry relies heavily on investment returns, with a high concentration in government securities, which increases interest rate sensitivity. The non-life insurance business is similar to broader economic trends, although compulsory car insurance remains only marginally profitable. Fitch notes that regulations aimed at strengthening capital, oversight and consumer protection are improving.
In Uzbekistan, Fitch describes an industry that relies heavily on returns on investment in domestic bank deposits, a structure that can boost yields but also strengthen close ties with the banking system. Heavy participation in reinsurance and financial risk policies exposes insurers to potential volatility as many insurers lack extensive historical claims data.
Steady increases in capital requirements through 2029 are driving consolidation, while newly formed national reinsurers aim to bolster domestic capabilities. However, the agency expects the market to continue to rely on significant exposures from international reinsurers.
As we enter 2026, the outlook for Saudi Arabia’s non-life insurance industry continues to improve. Fitch attributes this to higher prices across the automotive and medical product lines after a difficult 2025, although profitability remains below previous levels. Consolidation is accelerating as companies prepare for the coming risk-based capital regime and face tighter regulatory expectations around underwriting controls and governance standards.
These requirements increase administrative costs, but Fitch expects they will create a more resilient market structure. Rules giving domestic reinsurers priority in accepting cessions are reshaping market relationships and helping to increase concentration.
Fitch believes the outlook for the United Arab Emirates remains stable, with stable pricing for medical and automotive lines and growing demand due to population expansion. Larger insurers benefit from superior technical capabilities and cost efficiencies, while smaller companies continue to face stringent regulation, particularly in the event of solvency issues. Therefore, consolidation is likely to continue. Catastrophe exposure for local airlines remains limited due to widespread reinsurance use, a pattern exacerbated by heavy rainfall in Dubai in 2024.
Fitch Ratings concludes that in Europe, the Middle East and Central Asia, insurers will start 2026 with durable financial strength. Capital remains strong, investment income continues to anchor profits, and reinsurance is critical to managing changing loss patterns. While challenges vary across markets, Fitch Ratings found that the industry as a whole is well prepared to respond to the economic, regulatory and operational forces shaping the coming year.
Sabine Bauer, head of insurance for EMEA, added: “EMEA insurers are neutral on the outlook for the industry: pricing and competition will pose some challenges, but resilience will be supported by strong overall underwriting and new business, stable rates and strong capital. Although trends in smaller markets are divergent, the outlook is good.”
