The military conflict between the USA and Israel on one side and Iran and its proxies on the other side which erupted on 28 February 2026 has rapidly reshaped the risk landscape for all the insurance stakeholders including insurers, reinsurers, individuals and corporate clients operating in the region.

The rising geopolitical tensions and war hostilities have triggered immediate reactions in the markets ranging from sharp premium increases to the withdrawal of certain covers on one side and creating new demands on the other side.

While insurers generally maintain that the direct claims impact may remain manageable due to widespread of war exclusions within standard insurance policies’ wordings, the broader economic and operational consequences for the insurance sector are substantial.

The war’s effects extend beyond insured losses to include a shift in clients’ demands, pricing structures, supply chain disruptions, and new exposures such as cyber risks and political violence.

We are going to summarize below the different impacts that are affecting the market currently:

1. Defining The Current Events
Insurers are analyzing the current Middle East conflict primarily through policy definitions rather than political terminology. The key issue is to determine whether the ongoing events constitute “war or hostilities between sovereign states,” which would activate the standard war exclusion clauses present in most property, liability, and business interruption policies.

Since most of the wordings include the expression “war, invasion, acts of foreign enemies or hostilities whether war be declared or not,” a formal declaration of war is not required for the exclusion to apply. As a result, missile strikes, drone attacks, and military operations conducted by state forces are generally classified as warlike operations.

This means standard policies will typically not respond to losses resulting directly from missiles, anti-missiles or their debris as well as from any consequential loss.

However, the coverage may fall under specialized policies such as political violence, terrorism, or war-risk insurance. The insurers hereby also examine attribution of attacks, distinguishing between state military forces, proxy groups, or terrorist actors, as this affects coverage classification.

2. Impact On The Insurance Markets
2.1. Marine Cargo And Hull
The Strait of Hormuz carries roughly 20% of global seaborne oil shipments.

The most immediate effect is noticed in the supply chains running through the Persian Gulf, the Strait of Hormuz and even in the Eastern Mediterranean for the marine and energy insurance markets. The war premiums for vessels or cargo operating in these regions have surged dramatically, in some cases increasing by more than 1000%.

• Some maritime insurers have withdrawn war-risk coverage entirely for ships entering certain conflict zones.
• For oil tankers, the cost of insuring a single transit through the Strait of Hormuz has risen significantly due to the heightened threat of attack.

For insurers and reinsurers, the key concern is accumulation risk, where multiple vessels or energy assets could be affected by a single geopolitical event.

2.2. Aviation and travel Insurance
The aviation sector has also faced severe disruption due to airspace closures, missile threats, and flight cancellations across the region.

• Airlines operating near conflict zones face rising insurance costs and operational losses estimated at hundreds of thousands of dollars per day for some carriers.
• War-risk insurance for aircraft has been repriced as insurers reassess exposure to missile attacks and military escalation.

These disruptions have affected both passenger travel and cargo logistics, further influencing the travel insurance market.

3. Rising Demand
The conflict has significantly increased demand for certain types of insurance products:

3.1. Political Violence
Businesses across the Gulf and the Middle East region (including Cyprus and Turkey) are increasingly seeking coverage for political violence (including sabotage, riots and civil commotions). Companies operating data centers, hotels, energy facilities including power plants, airports and other infrastructure assets have become increasingly aware of potential coverage gaps after recent attacks exposed vulnerabilities in standard policies.

3.2. Cyber Insurance
Risk specialists and managers expect cyber insurance demand to rise significantly as such geopolitical tensions increase the cyberattack risks.

3.3. Trade Credit And Political Risk Insurance
Companies exposed to Middle Eastern markets are increasingly concerned about government actions, payment delays, sanctions, expropriation and currency controls.

As a result, demand is growing for:
• Political risk insurance.
• Trade credit insurance.
• Contract frustration coverage.

4. Human Resources Concerns
In the Employee Benefits sector, coverage can be different.

Many life insurance and some international medical insurance plans include protection for passive war risks, meaning employees who are injured as unintended victims of hostilities will receive medical treatment coverage. Employers are requesting now to include passive war medical treatment in medical insurance policies which do not cover passive war. In addition, several global assistance providers offer emergency evacuation and repatriation services, allowing companies to relocate employees and their families from conflict areas when security conditions deteriorate. As a result, employers are increasingly reviewing their medical and assistance programs to ensure evacuation logistics and crisis support are included. In addition, many employers are revising the Employee Assistance Programs and their scope of applicability or requesting to implement such programs in order to provide support for their employees and their dependents.

5. Personal Insurances
At the household level, families leaving conflict-exposed areas should also ensure their home insurance remains in force while properties are temporarily vacant. Adequate coverage for unoccupied homes, theft, and damage is essential when residences are left unattended during evacuations.

6. Shift In Client Behavior
The war has also changed how corporate clients approach insurance and risk management. They are increasingly asking for coverage clarity (Whether war exclusions apply and raising claims scenarios), geopolitical risk analysis (risk identification and modeling), business interruption resilience (supply chain disruptions, denial of access, contingent business interruption), crisis response support.
For us, insurance brokers, this shift means moving beyond traditional insurance placement toward holistic risk advisory services.

Conclusion
The current conflict highlights the central role of the insurance industry in managing geopolitical risks. While war exclusions may limit direct claims for insurers, the broader consequences for the sector are significant, the war is reshaping underwriting strategies, risk pricing and capacity, and client expectations across different lines of business. At the same time, it is accelerating demand for specialized insurance solutions that address emerging geopolitical and cyber risks.

For the whole insurance industry, the key challenge is to balance risk capacity with the growing demand for protection in an increasingly uncertain environment.

Associated Alliance Emergency Activation
We remain fully operational and committed to supporting our clients without interruption.

Our teams across the region are available 24/7 to assist you:

For Employee Benefits and Personal Lines:
📞 +20 1140 406 636
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📞 +20 1140 607 866 
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