Middle East Conflict Drives Insurers to Tighten War and Political Violence Coverage

The conflict in the Middle East is sending ripples through the global insurance and reinsurance markets, fundamentally reshaping how insurers approach war, political violence, and terrorism coverage. The situation has reordered risk priorities for businesses worldwide, with war now overtaking civil unrest as the top political violence exposure for global companies.

Major reinsurers have responded by setting aside hundreds of millions of dollars in reserves related to the Middle East conflict. However, industry executives have warned that the second-order effects — particularly energy-driven inflation — could prove more damaging than direct war losses. Higher crude oil prices stemming from the conflict are feeding through into broader inflation, raising claims costs across multiple insurance lines and complicating reserving and pricing.

The market response has been described by reinsurance broker Howden Re as 'selective rather than structural.' Reinsurers have broadly maintained capacity and avoided imposing broad exclusions, but individual insurers are tightening their underwriting. Hiscox, for example, has informed brokers it will adopt a tougher stance on global war, political violence, and terrorism renewals due to the conflict, according to multiple senior market sources. The maritime sector faces particular scrutiny: the Norwegian Shipowners' Mutual War Risks Insurance Association is treating March 4, 2026, as the start date for potential blocking and trapping exposures within the Gulf, while Chubb's CEO described security around Hormuz transit as an 'hour to hour' assessment.

The Strait of Hormuz — through which a significant share of global oil shipments pass — has become a focal point of insurance risk. Tanker traffic through the strait has fluctuated as crossing concerns ebb and flow, directly affecting marine cargo and hull insurance pricing. The developments come against a backdrop of cautious optimism, with reports of 'major progress' in US-Iran talks. For the broader specialty insurance market, the conflict underscores how geopolitical risk has become a dominant theme in 2026, affecting everything from aviation and marine coverage to the energy-driven inflation that pressures claims costs across the entire industry.