Global Insurance Market on Alert as US Plans Military Action Against Iran
The global insurance industry is bracing for potential fallout as President Donald Trump has approved attack plans against Iran, escalating the ongoing conflict with Israel. This development has sent shockwaves through marine, political risk, energy, and aviation insurance markets, with underwriters recalibrating exposure assumptions amid heightened geopolitical tensions.
According to US media reports citing multiple sources, Trump has given preliminary approval to a military plan targeting Iranian nuclear infrastructure, though he has delayed execution to assess Tehran’s response. “I may do it, I may not do it,” Trump told reporters, reiterating demands for Iran to abandon its nuclear ambitions. The Pentagon has bolstered its regional presence by positioning additional naval assets in the eastern Mediterranean and Arabian Sea.
The London insurance market’s Joint War Committee (JWC) met recently to review implications for global shipping, particularly through critical waterways like the Strait of Hormuz. War risk premiums for ships transiting the Gulf have surged by up to 60% compared to last month, with seven-day cover for vessels visiting Israeli ports reaching as high as 1% of hull value. Insurers are reassessing aggregate exposures where marine, energy, and political violence policies intersect.
Industry leaders are particularly concerned about electronic jamming and cyber vulnerabilities in commercial fleets. “What is particularly challenging right now is some of the jamming that’s happening,” said Wael Sawan, CEO of Shell, referencing signal interference around the Strait of Hormuz. Recent incidents, including a non-hostile collision between two tankers near Khor Fakkan, have heightened concerns about maritime security.
The potential for formal US involvement in the conflict is prompting reinsurers in Europe and Asia to monitor the situation closely. This development raises questions about the availability of war and terrorism coverage across the MENA region, particularly if energy infrastructure or LNG terminals become targets. Aviation insurers are also reviewing exposures on Middle Eastern flight routes, potentially applying war risk surcharges if the situation escalates.
Political risk underwriters are on high alert as well, as a US-led military campaign could heighten threats in Iranian cities where evacuations and unrest have already begun. The US embassy in Israel has activated emergency evacuation protocols for American citizens, with similar plans likely for other nationals in the region.
The insurance market is operating on the assumption that escalation is not only possible but increasingly probable. The next week could be pivotal, as a decision by Trump to authorize active engagement would mark the first formal US military involvement in hostilities with Iran since the 1980s, potentially reshaping risk pricing across multiple global sectors.
