The recent coordinated US and Israeli strikes on Iran, leading to the reported deaths of senior figures including Supreme Leader Ayatollah Ali Khamenei, have fundamentally shifted the risk landscape in the Gulf. Iran’s swift response, involving missile and drone attacks across the region and the closure of the Strait of Hormuz, immediately disrupted a vital global energy and shipping artery. For insurers and reinsurers, this is not a distant event; it is a direct and immediate pressure test across political violence, marine, aviation, political risk, and trade credit markets.
The pattern of Iranian forces launching missiles and Shahed drones at targets spanning Saudi Arabia, Kuwait, Bahrain, UAE, Qatar, Israel, and Cyprus—including military facilities, oil and gas installations, ports, airports, shopping centers, and hotels—is set to generate a wave of political violence claims. Physical damage and business interruption will be significant. While many of these risks are underwritten locally, their reinsurance into London and other international hubs means aggregation becomes the central concern. Definitions of 'event' and 'occurrence' will be rigorously examined, particularly with barrages spread over multiple days and territories. The finite stocks of interceptor missiles in regional air defense systems, coupled with the possibility of Iran holding back more advanced weaponry, only compounds this pressure on reinsurance structures.
Marine and Aviation Exposures Intensify
War and piracy risks were already elevated in the Red Sea and Gulf of Aden. The current escalation extends this volatility into the Persian Gulf and the Strait of Hormuz, a chokepoint for global seaborne oil and LNG exports. Hull policies are being reassessed, with war underwriters withdrawing, narrowing, or repricing cover, and adding countries to high-risk lists. Fixed-premium marine liability markets are issuing cancellation notices, offering reinstatement only on revised terms. This is not merely a pricing challenge.
The market’s default response to uncertainty is often withdrawal.
If vessels become detained or effectively trapped on the Gulf side of the chokepoint for an extended period, loss-of-hire wordings and war detention clauses will be triggered. Standard clauses treating a vessel detained for 12 months as a constructive total loss raise the specter of substantial war claims if transit remains impossible. A successful strike on a laden tanker would, in turn, create significant pollution and P&I exposure. Operational risks are also rising, with reports of operators switching off AIS transponders and incidents of GNSS jamming and spoofing, increasing collision and grounding risks, and potentially impacting navigational warranties and cyber or war-related exclusions.
For cargo interests, the significant volumes already in transit face diversions around the Cape of Good Hope or to alternative ports, adding cost, delay, and congestion. Delay and non-delivery provisions in cargo wordings will come under intense scrutiny. Where war and strikes are written separately, distinguishing between war, terrorism, and political violence triggers for delayed or detained but undamaged cargo will be a complex exercise.
Airspace closures and restrictions over Qatar, UAE, Bahrain, and Kuwait have led Gulf carriers to ground or reroute large parts of their fleets. Civilian airports, including Dubai, Abu Dhabi, Bahrain, and Kuwait, have been struck, increasing the risk of aircraft damage or destruction on the ground. Aviation war markets are issuing review and cancellation notices, tightening terms. However, the English Commercial Court’s 2025 decision in AerCap v AIG, concerning aircraft stranded in Russia, complicates the picture. The court found aircraft were already within the scope of a war peril before physical loss was finalized. By analogy, fleets already grounded in high-risk airports may be argued to be within a war peril, potentially leaving war underwriters exposed to subsequent losses unless cancellation provisions are properly exercised. Wordings around seven-day notice, territorial exclusions, and “in the grip of the peril” concepts are now under a microscope.
Energy Shock and Contractual Stress Points
A prolonged disruption or closure of the Strait of Hormuz risks a sustained energy price shock. Crude and gas prices have already risen, and further escalation could push oil well above US$100 a barrel, adding renewed inflationary pressure globally. For political risk and trade credit carriers, this scenario raises several concerns. A rise in trade credit and contract frustration claims is likely as buyers struggle with higher input costs and interrupted supplies. Non-payment and rescheduling pressures will mount on sovereign and quasi-sovereign borrowers reliant on imported energy. Furthermore, forced-abandonment or expropriation claims could emerge if multinational companies evacuate staff and suspend operations in parts of the Gulf and Iran. Even if a global recession is avoided, localized solvency stress among energy-importing corporates and states could generate higher default rates and claims on non-payment and contract frustration covers.
The Critical Information Deficit
The speed and complexity of events in the region are drawing sharp attention to how insurers source and interpret intelligence. David Heathcote, head of intelligence at McKenzie Intelligence Services, noted that in fast-moving conflict situations, insurers’ decisions are often constrained by the quality and timeliness of information. When reliable data is limited, the default response can be to pull back capacity or pause new cover while underwriters work to understand the exposures and evolving risk environment. This creates a disconnect, as insureds have limited time to reassess their positions. Heathcote highlighted that strikes have so far hit military sites, energy infrastructure, ports, civilian airports, and prominent hotels in countries close to Iran, as well as targets in Israel, indicating that travel disruption and business interruption losses are likely to build as restrictions persist. He also pointed out that the sheer volume and inconsistency of media reporting during conflicts make it difficult for insurers to distinguish signal from noise, significantly increasing the value of verified geospatial and open-source intelligence. From an industry perspective, conflict zones truly pose an information challenge as much as a pricing challenge. The ability to combine satellite imagery, on-the-ground reporting, and proprietary datasets into near real-time, decision-ready insight will influence how quickly markets can differentiate between temporary volatility and structural shifts in risk. It will determine whether they can maintain cover on a proportionate basis rather than withdrawing capacity until conditions stabilize, a crucial factor for market stability and client confidence.
The ability to differentiate between temporary volatility and structural shifts in risk hinges on superior intelligence.The implications are clear: the current geopolitical environment demands a more sophisticated approach to risk assessment and underwriting, moving beyond reactive adjustments to proactive, intelligence-driven strategies. The market is being forced to adapt, and those with superior information will be best positioned to navigate the turbulence.
