Introducing the Sector

The insurance sector is considered one of the vital pillars of the Palestinian economy due to its pivotal role in supporting economic and social stability and promoting the concepts of security and social solidarity. Through the contractual relationship between the insurer and the insured, insurance fulfills a dual function with social and economic dimensions; it provides protection against risks, serves as an effective tool for capital accumulation, and is an essential element in the production process, which contributes to stimulating growth and strengthening the resilience of the national economy.

The insurance sector in Palestine has witnessed, in recent years, remarkable development, both in terms of the expansion of the insurance portfolio size and the diversity and quality of insurance services offered to the public. This sector continues to grow and adapt despite increasing challenges, reaffirming its position as a stable and effective pillar within the Palestinian economic system.

The insurance sector is supervised and regulated by the PCMA pursuant to the PCMA’s Law No. (13) of 2004 and Insurance Law No. (20) of 2005. The Insurance Directorate is responsible for carrying out these tasks by monitoring the performance of insurance companies and ensuring their compliance with the applicable laws, regulations, and instructions. Despite the difficult regional and local challenges that dominated the landscape during 2024, chief among them the ongoing Israeli aggression on the Gaza Strip since October 2023, resulting in widespread destruction and profound humanitarian and economic impacts, in addition to regional tensions in Yemen, Lebanon, and other neighboring countries that negatively affected the investment climate and economic confidence, the Palestinian insurance sector demonstrated notable resilience, adaptability, and achieved positive outcomes.

The total insurance premiums collected in the Palestinian market amounted to USD 383 million during 2024, compared to USD 398 million in 2023, representing a decrease of 4%. This decline is mainly attributed to the weakened purchasing power, especially in areas affected by the war, and the overall slowdown in economic activity. Conversely, the value of claims paid by insurance companies to beneficiaries of insurance coverage rose to USD 259.9 million, compared to USD 257.7 million in the previous year, achieving an increase of approximately 1%.

As for net profits, insurance companies recorded profits amounting to USD 15.9 million in 2024, compared to USD 7.1 million in 2023, reflecting a growth rate of 123%. This significant improvement is attributed to several factors, the most prominent of which are:

• The resumption of operational activity of insurance companies to acceptable levels in the West Bank, which constitutes the largest portion of the portfolio, while the contribution of the Gaza Strip sector did not exceed 2%.
• The completion of the implementation of the International Financial Reporting Standard (IFRS 17), including reversing its impact on previous years, which contributed to improving the financial position of insurance companies.
• The effectiveness of the regulatory procedures and supervisory measures adopted by the PCMA to control the sector’s performance and improve the efficiency of risk management.

Regarding the technical indicators:

• The insurance penetration ratio (total premiums to current-price GDP) rose to 3.51% at the end of 2024, compared to 2.29% at the end of 2023, indicating a relative recovery in the depth of the insurance market.
• Meanwhile, the insurance density (average per capita share of the insurance portfolio) decreased to USD 69.74 compared to USD 71.22 in the previous year, attributed to the economic contraction and decline in individual income in several areas.

These indicators reflect the Palestinian insurance system’s ability to withstand challenges, respond effectively, and maintain a balance between insurance protection and financial sustainability, even amid a regional and local environment characterized by instability and ongoing fluctuations.

*According to estimated data issued by the Palestinian Central Bureau of Statistics.