Global Insurance Industry on Alert as Iran-Israel Conflict Escalates
The global insurance industry is bracing for potential impact from the escalating conflict between Iran and Israel after President Donald Trump approved attack plans and moved closer to authorizing US military involvement. According to multiple sources cited in US media, Trump has given preliminary approval to a military plan targeting Iranian nuclear infrastructure but has delayed execution to observe Tehran’s response regarding its uranium enrichment program.
“I may do it, I may not do it,” Trump told reporters, repeating demands for an unconditional Iranian retreat from its nuclear ambitions. The Pentagon has reinforced its regional presence by positioning additional naval assets in the eastern Mediterranean and Arabian Sea, enhancing US capacity for rapid engagement if needed.
Insurers across marine, political risk, energy, and aviation markets are recalibrating exposure assumptions, particularly given the growing sophistication of Iranian missile systems. Casualty figures have already exceeded 600 in Iran, while 24 Israeli civilians have been reported dead in retaliatory attacks.
Marine Market Faces Expanding Peril
The London insurance market’s Joint War Committee (JWC) met to review implications for global shipping, particularly through critical waterways like the Strait of Hormuz. War risk premiums for ships transiting the Gulf have risen steeply, with some increasing by over 60% compared to last month. Rates for seven-day cover on vessels calling at Israeli ports have climbed to as much as 1% of hull value.
Insurers are reassessing aggregate exposures where marine, energy, and political violence policies overlap. Facultative reinsurers have been particularly vigilant, with some signaling reluctance to expand Gulf-related capacity ahead of mid-year treaty renewals. “What is particularly challenging right now is some of the jamming that’s happening,” said Wael Sawan, CEO of Shell, referring to electronic AIS signal interference around the Strait of Hormuz.
Geopolitical Ramifications and Insurance Implications
The broader geopolitical implications are being closely monitored by reinsurers in Europe and Asia. A formal US entry into the conflict could affect the availability of war and terrorism covers across the MENA region, particularly if energy infrastructure or LNG terminals are targeted. Although the Strait of Hormuz remains open, intelligence sources indicate increased Iranian naval activity near key chokepoints, heightening fears of miscalculation.
Aviation insurers are also reviewing exposures on routes through Middle Eastern airspace, requesting detailed flight plans and considering war risk surcharges. Political risk underwriters are on alert for potential heightened threats in Iranian cities, where evacuations and unrest have begun.
The insurance market is preparing for potential escalation, with the next week proving pivotal. Should Trump authorize active engagement, it would mark the first formal US military involvement in hostilities with Iran since the 1980s, potentially reshaping risk pricing across global sectors.
