The Iranian conflict has spilled over into the insurance industry: premiums have surged tenfold, and a "claims tsunami" is brewing.
2026-03-31 11:38:35
The conflict in Iran has entered its fifth week, leading to a surge in demand for war insurance in the Middle East and sparking numerous disputes over rising premiums and the coverage of existing policies.
Standard commercial insurance policies, such as property insurance, cybersecurity insurance, and business interruption insurance, typically do not cover war-related losses. This means that businesses must pay hefty additional premiums to obtain specific coverage against threats such as missile attacks and drone strikes. Companies are scrambling to purchase new war risk insurance and political violence insurance .
"In the past few weeks, most insurance companies have received well over 300 new insurance applications," said Fergus Critchley, global head of terrorism and political violence at brokerage firm WTW. This figure reflects a sharp reassessment of risk in the market .
S&P Global Ratings insurance analyst Sachin Sani points out that war risk insurance for real estate in the Persian Gulf region currently typically costs 6% to 8% of the property value, while peacetime rates are far below 1%. He emphasizes, "The cost of purchasing war risk insurance has become extremely high. It's still possible to buy it if they're willing to pay, but it's very strictly controlled."
In recent years, many Gulf businesses have opted out of war risk insurance to reduce premiums, having previously viewed the region as a relatively safe haven. This assessment was quickly overturned after the outbreak of conflict, leading to the current surge in insurance purchases .
The Fairmont Palms Hotel in Dubai caught fire early in the war. It was only insured for counterterrorism and sabotage, but had not paid the additional premium for a policy explicitly covering political violence and war-related losses. This case highlights the gap between standard insurance policies and the risks of war.
Although claims have emerged sporadically, the overall scale of losses remains difficult to estimate precisely due to the difficulty in sending surveyors into the war zone to assess damage. Brian Schneider, an insurance analyst at Fitch Ratings, stated that losses from political violence policies, including those related to missile damage to energy terminals, could reach hundreds of millions of dollars.
Marine insurance has become a hotspot in the conflict. The de facto closure of the Strait of Hormuz has left approximately 1,000 vessels stranded. According to the latest information from Lloyd's Register Marine, more than 20 vessels have been hit or narrowly escaped hit since the start of the conflict. While vessels can be insured for transit through the strait, the costs are extremely high, leading most to choose alternative routes .
Emirates Airlines is embroiled in a dispute with insurance companies over war-related premium increases. Some insurers have even withdrawn from co-insurance organizations that provided coverage for its fleet. Dubai International Airport, where Emirates' hub is located, was attacked by Iran, resulting in damage to at least one aircraft (requiring only cosmetic repairs and no claims were filed). Brokers opposed the insurance companies' demand for higher rates, and ultimately the lead insurer continued to cover the aircraft with a relatively modest increase .
Attorney Raymond Wade warned, "This could trigger a wave of lawsuits. The longer this situation continues, the more cases there will be." Sanctions further complicate compensation claims; maritime war risk policies often include sanctions exclusion clauses, and expanded sanctions could prevent some legally insured vessels from receiving compensation.
The impact of the conflict is spreading beyond the Gulf region. James Bannister, head of global war and terrorism at brokerage firm Lockton, said there has been an increase in demand for terrorism insurance from large multinational corporations. These companies are concerned that tensions in the Middle East could trigger an increase in extremist activity in Western countries.
Insurance companies tend to use exclusion clauses to limit payouts, and disputes are expected to increase further in the future . Prolonged cargo delays and vessel damage will generate more claims, with some cases potentially taking years to resolve.
The conflict in Iran has significantly increased market demand for war and political violence insurance in the Middle East, leading to a sharp rise in premiums and exposing the limitations of previous policy coverage. The increase in disputes in the maritime, aviation, and property sectors reflects the urgent need for companies to adjust their risk management in a high-risk environment. Future insurance market pricing, underwriting conditions, and reinsurance capacity will continue to be affected by the development of conflicts, and global supply chains and energy transportation costs will face long-term pressure.
Standard commercial insurance policies, such as property insurance, cybersecurity insurance, and business interruption insurance, typically do not cover war-related losses. This means that businesses must pay hefty additional premiums to obtain specific coverage against threats such as missile attacks and drone strikes. Companies are scrambling to purchase new war risk insurance and political violence insurance .
"In the past few weeks, most insurance companies have received well over 300 new insurance applications," said Fergus Critchley, global head of terrorism and political violence at brokerage firm WTW. This figure reflects a sharp reassessment of risk in the market .
Insurance premiums have increased significantly.
S&P Global Ratings insurance analyst Sachin Sani points out that war risk insurance for real estate in the Persian Gulf region currently typically costs 6% to 8% of the property value, while peacetime rates are far below 1%. He emphasizes, "The cost of purchasing war risk insurance has become extremely high. It's still possible to buy it if they're willing to pay, but it's very strictly controlled."
In recent years, many Gulf businesses have opted out of war risk insurance to reduce premiums, having previously viewed the region as a relatively safe haven. This assessment was quickly overturned after the outbreak of conflict, leading to the current surge in insurance purchases .
Disputes related to the scope of coverage
The Fairmont Palms Hotel in Dubai caught fire early in the war. It was only insured for counterterrorism and sabotage, but had not paid the additional premium for a policy explicitly covering political violence and war-related losses. This case highlights the gap between standard insurance policies and the risks of war.
Although claims have emerged sporadically, the overall scale of losses remains difficult to estimate precisely due to the difficulty in sending surveyors into the war zone to assess damage. Brian Schneider, an insurance analyst at Fitch Ratings, stated that losses from political violence policies, including those related to missile damage to energy terminals, could reach hundreds of millions of dollars.
Impact of marine and aviation insurance
Marine insurance has become a hotspot in the conflict. The de facto closure of the Strait of Hormuz has left approximately 1,000 vessels stranded. According to the latest information from Lloyd's Register Marine, more than 20 vessels have been hit or narrowly escaped hit since the start of the conflict. While vessels can be insured for transit through the strait, the costs are extremely high, leading most to choose alternative routes .
Emirates Airlines is embroiled in a dispute with insurance companies over war-related premium increases. Some insurers have even withdrawn from co-insurance organizations that provided coverage for its fleet. Dubai International Airport, where Emirates' hub is located, was attacked by Iran, resulting in damage to at least one aircraft (requiring only cosmetic repairs and no claims were filed). Brokers opposed the insurance companies' demand for higher rates, and ultimately the lead insurer continued to cover the aircraft with a relatively modest increase .
Attorney Raymond Wade warned, "This could trigger a wave of lawsuits. The longer this situation continues, the more cases there will be." Sanctions further complicate compensation claims; maritime war risk policies often include sanctions exclusion clauses, and expanded sanctions could prevent some legally insured vessels from receiving compensation.
Global chain reaction
The impact of the conflict is spreading beyond the Gulf region. James Bannister, head of global war and terrorism at brokerage firm Lockton, said there has been an increase in demand for terrorism insurance from large multinational corporations. These companies are concerned that tensions in the Middle East could trigger an increase in extremist activity in Western countries.
Insurance companies tend to use exclusion clauses to limit payouts, and disputes are expected to increase further in the future . Prolonged cargo delays and vessel damage will generate more claims, with some cases potentially taking years to resolve.
Editor's Summary
The conflict in Iran has significantly increased market demand for war and political violence insurance in the Middle East, leading to a sharp rise in premiums and exposing the limitations of previous policy coverage. The increase in disputes in the maritime, aviation, and property sectors reflects the urgent need for companies to adjust their risk management in a high-risk environment. Future insurance market pricing, underwriting conditions, and reinsurance capacity will continue to be affected by the development of conflicts, and global supply chains and energy transportation costs will face long-term pressure.
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