In times of crisis, trade does not necessarily stop when ports are disrupted or shipping lanes are closed. Sometimes the disruption starts elsewhere, when the cargo or ship becomes more expensive to insure, or markets fail to provide the necessary coverage for war risks. With the escalation of geopolitical risks in the region, and its impact extending to shipping traffic, insurance and reinsurance markets, Saudi Arabia is moving to create a national umbrella that helps its trade to continue moving even in a highly volatile maritime environment.
From this standpoint, the Council of Ministers approved the establishment of the “Saudi War Risk Insurance Pot for Goods and Ships,” in a step aimed at providing local insurance capacity to confront risks that may raise the cost of transportation and trade, or limit the ability of international insurance companies to provide coverage, in a way that enhances the continuity of movement of goods and supports the work of companies related to transportation and logistics services.
The step is of particular importance to Saudi Arabia in light of its expanding role as a center for trade and logistics services, as the competitiveness of ports and distribution centers is not only related to the speed of handling and the cost of transportation, but also to the ability of companies to price risks and deal with them when geopolitical conditions change suddenly.
After the Cabinet approved this mechanism, Finance Minister Mohammed Al-Jadaan confirmed that the Saudi Marine Insurance Base is a specialized national mechanism aimed at supporting the continuity of trade movement and supply chains in partnership between the public and private sectors.
He explained that the establishment of this pool will contribute directly to raising the technical readiness of the local insurance market, and expanding its absorptive capacity to provide the necessary insurance coverage in accordance with specific controls and frameworks from the Insurance Authority.
He added that this approach supports the flexibility of the national economy and ensures its stability in the face of regional and international crises and challenges.
Specialists who spoke to Asharq Al-Awsat believe that the economic value of the pool will appear especially during periods of crises, when insurance premiums jump, or insurance and reinsurance companies become more stringent in accepting risks associated with certain regions, considering that providing a stable umbrella of coverage can give transport companies, importers and exporters more space to plan and continue carrying out their work.
Stability of the insurance environment
Logistics services specialist, Nashmi Al-Harbi, said that the high risks of navigation in the Red Sea and the Gulf have prompted some insurance companies to tighten the conditions for covering ships related to the region, which makes the establishment of the Saudi vessel an important time for transport companies and local logistics services, as it contributes to reducing one of the most prominent sources of uncertainty facing international transport contracts.
Al-Harbi added in a statement to Asharq Al-Awsat that international companies that deal with Saudi Arabia or whose shipments pass through its ports will in turn benefit from increased clarity and stability of the insurance environment, explaining that the scope of the pool is not limited to ships located in the Kingdom, but rather includes activities and companies with Saudi interests, according to eligibility conditions and approved coverage.
Al-Harbi believes that providing a stable umbrella for war risks enhances Saudi Arabia’s attractiveness as a regional center for storage, distribution, and re-export, pointing out that logistics companies do not only look at the cost of the port, transportation, and handling when choosing their destinations, but also take into account the cost of the risks that accompany goods and ships throughout the journey.
Cost of risk
For his part, the expert in supply chains and logistics services, Engineer Khaled Al-Ghamdi, stressed that the importance of the “Saudi War Risk Insurance Pot” goes beyond providing insurance coverage for ships and goods, to include addressing a deeper challenge facing companies, which is the difficulty of predicting the cost of risks when geopolitical conditions change suddenly.
Al-Ghamdi explained that having a national umbrella for war risks gives Saudi logistics companies greater stability when planning trips, concluding contracts, and setting prices. He said that companies that manage thousands of containers not only need to know the costs of fuel, transportation, and handling, but they also need greater certainty about the cost of insurance, so that insurance risks do not suddenly turn into a high cost, or an obstacle to the continuation of flights.
He pointed out that the decision sends a message to international logistics companies that Saudi Arabia continues to build a commercial environment capable of operating even in light of the disruption of shipping traffic, considering that this may be an additional factor in the decisions of international companies related to choosing ports, distribution centers, and re-exports.
He added that the choice of the logistics center does not depend on the geographical location and the cost of transportation alone, but is also affected by its ability to absorb shocks and manage the risks associated with the movement of trade, pointing out that enhancing this ability can support the flexibility of supply chains, raise the confidence of international companies, and open the way for more effective partnerships in risk management.
Insurance pool arrangements
The initiative is based on establishing a national insurance mechanism that brings together the public and private sectors under the supervision of the Insurance Authority, with the aim of enhancing the ability of the local insurance market to deal with war risks associated with maritime transport, and to mitigate the impact of fluctuations and high reinsurance costs in global markets. The initiative also aims to support Saudi Arabia's competitiveness as a logistics center, at a time when the need for more flexible tools to manage risks facing trade and transportation is increasing.
At the implementation level, the Saudi Reinsurance Company (Re) announced its selection by the Insurance Authority to lead and supervise the pool arrangements, with the participation of insurance companies operating in the local market.
“Re” will manage the technical operations and reinsurance arrangements for the pool, allowing beneficiaries to obtain coverage through participating insurance companies, in accordance with the approved terms and conditions.
Initiative objectives
The Insurance Authority has identified four main objectives for establishing the pool, which are to enhance the readiness of the insurance market and its ability to absorb marine insurance risks, support the continuity of trade movement and supply chains, reduce the impact of sharp fluctuations and high reinsurance costs in global markets, in addition to enhancing Saudi Arabia’s competitiveness as a pivotal logistics center.
The scope of coverage provided by the container includes insurance of goods transported by land, sea, and air, and insurance of ship hulls against the damages and risks covered by the coverage, in addition to the responsibilities of charterers, protection coverage, and compensation, which provides a broader scope of protection for various parties associated with transportation and trade operations. The list of beneficiaries of the pool includes exporters, importers, ship owners and operators, shipping companies, maritime transport, sectors related to the movement of goods, logistics services, and supply chains, in addition to national insurance companies participating in the pool.
International models
This mechanism is not limited to Saudi Arabia, as other countries have resorted to establishing national vessels to deal with the high risk of war and the difficulty of obtaining coverage from traditional insurance markets. India stands out as a modern model in this field, after this year it launched a marine insurance pool with a total capacity of $1.5 billion, including $1.4 billion in the form of a sovereign guarantee, to cover war risks on ships and goods related to Indian interests. The Indian experience demonstrated the size of the demand for this type of coverage, as the system issued more than 1,600 policies within weeks of starting its work, while war risk insurance premiums declined by about 35 to 40 percent from the peak levels recorded during the escalation of tensions in the region.
This trend reflects a shift in how countries deal with the risks of maritime war, from completely relying on global insurance and reinsurance markets to developing national capabilities that help keep trade moving when the cost of coverage rises, or the appetite of private insurance companies to bear risks decreases.
In an indication of the Kingdom’s increasing role in the digital economy and consolidating its position as a regional center for e-commerce, Saudi Arabia acquired about 93 percent of e-commerce investments in the Gulf Cooperation Council countries during the year 2025, up from 46 percent in 2021, at a time when the spread of e-commerce in the retail sector in the Gulf countries is still at limited levels, indicating a wide room for growth in the coming years.
In this regard, the results of the “New Geography of Growth” session, organized by the “Global Retail Leaders Circle Forum” in cooperation with “Selfridges” in London, showed that the spread of e-commerce in the retail sector in the Gulf countries is still at 11 percent.
The Gulf region also continues to strengthen its role in shaping the future of the global luxury goods sector, driven by strong local demand, continued investment flows, and its growing openness to global markets.
The discussions showed that investments related to e-commerce are increasingly moving to sectors beyond retail trade, to include logistics services, order fulfillment, and digital infrastructure, in conjunction with the growth of e-commerce in the GCC countries at a pace exceeding global averages.
Panos Lenardos, head of the Global Retail Leaders Circle Forum, said that growth opportunities have become more disparate between markets, sectors and companies, while investments are moving towards more selectivity. At this time, the importance of understanding the factors that drive sectors and companies to achieve rapid growth, while others face a slowdown in their path, is highlighted.
He added that the Gulf region continues to strengthen its presence in this changing landscape, which is expressed in the theme “An Unequal Future,” the dimensions of which the forum will continue to discuss during the forum scheduled to be held in Riyadh on February 1 and 2, 2027.
For her part, Deborah Aitken, senior retail sector analyst at Bloomberg Intelligence, said that we continue to observe growth in various parts of the Gulf countries, although this growth will be achieved through channels different from what was prevalent in the past, and that the recovery of tourism is likely to take a longer time, while local investments and the employment of regional capital continue to grow.
The Gulf is strengthening its presence in the luxury goods market
Global Blue data presented during the session also showed that, despite the decline in the number of travelers from the Middle East by double digits during some periods of 2026, spending by high-net-worth Gulf visitors maintained levels close to the previous year, and this reflects the increasing concentration of spending on luxury goods among the highest spending consumers in the region.
At the level of the most prominent luxury goods destinations in Europe, the share of high-net-worth American visitors has risen from less than 10 percent historically to about 17 percent, while their purchasing behavior has become more closely linked to the performance of the S&P 500 index than to exchange rate fluctuations.
Travelers from Brazil, Mexico and Argentina also continue to increase their share of spending on tax-free luxury goods.
In this context, Global Blue Regional Chief Operating Officer Derek Hardman said: “The number of high-spending travelers has become more concentrated, but average spending continues to rise,” adding that 1 percent of shoppers today represent 27 percent of total spending on tax-exempt luxury goods.
With the increasing concentration of spending, luxury shopping destinations have begun to reconsider the design of the spaces and experiences they offer, giving greater importance to personal services, customer relationship management, hospitality and experiences tailored to the needs of shoppers.
Selfridges Group CEO, Andre Maeder, agrees with this proposition, commenting: “Luxury is no longer limited to purchasing a product, but rather is about creating moments that remain in the memory. Therefore, the retail sector today is based on creating happiness.”
Participants also agreed that long-term competitive advantage will not only depend on the transformation of physical spaces and experiences, but will also require organizations that combine operational excellence, creativity, craftsmanship, and the continued ability to maintain their cultural presence and relevance.
