War Insurance Industry Grows Amid Global Tensions
War risk insurance has moved to the forefront as the Middle East conflict generates claims for damaged vessels, property loss, aviation incidents and cyber attacks, while business interruption losses loom as the Strait of Hormuz remains blocked.
Rising reserves signal cautious outlook
Mid‑May, reinsurance giant Munich Re disclosed a €90 million reserve for anticipated payouts. CEO Andrew Buchanan called the figure “very cautious”, noting it covers possible marine war market claims and political violence losses. He added the reserve is lower than payouts recorded in the first year of the Ukraine war.
Claims already include trapped ships and damaged cargo, with insurers watching the blockade’s impact on supply chains. The reserve reflects uncertainty about future losses, especially as the conflict persists.
U.S. back‑stop plan meets industry skepticism
In early March, former President Trump announced a U.S. government reinsurance back‑stop for vessels working through the Persian Gulf. The statement suggested mainstream underwriters might be unwilling to cover ships in the Strait of Hormuz.
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The International Underwriting Association’s chief, Chris Jones, rebutted the claim, saying coverage remains available despite the heightened risk. The Lloyd’s Market Association issued a similar correction, calling reports of cancelled or unaffordable policies “not accurate”.
Later, the U.S. International Development Finance Corporation (DFC) partnered with insurer Chubb to launch a $20 billion Maritime Reinsurance Plan aimed at reviving Gulf trade. DFC’s chief, Ben Black, framed the effort as a step toward restoring market confidence and resuming energy flow.
Two months on, the scheme had not identified additional reinsurance partners, and Chubb declined comment on its current status. Industry observers noted that the lack of shipping activity was not due to missing coverage but rather to captains and crews opting out of risky routes.
London market steps up capacity
London’s war‑risk market has long provided coverage for high‑risk zones. Gallagher’s marine managing director, Andrew James, emphasized that “Lloyd’s and the London market have always, always been open for war.” He explained that modern communications give captains real‑time risk data, allowing them to refuse passage without insurance constraints.
In April, specialist insurer Beazley announced a $1 billion consortium to augment existing marine war‑risk capacity. Its chief, Adrian Cox, highlighted the market’s agility in meeting global supply‑chain needs.
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That agility was evident during the Ukraine conflict, where insurers initially withdrew coverage as ships were trapped and ports shelled. Rory Colacicchi of McGill & Partners recalled war‑risk rates jumping from zero to five percent of vessel value before settling around three percent for voyages to Odesa and the western Black Sea.
When a Liberian‑flagged vessel was struck near Odesa, a joint Ukrainian‑UK scheme, brokered by Marsh and led by the Ascot syndicate at Lloyd’s, provided up to $50 million in hull war risk and an equal amount in protection & indemnity cover.
For ship owners and cargo owners, the swift re‑entry of coverage means they can secure financing and maintain trade flows without waiting for ad‑hoc government schemes. The market’s ability to mobilize capital quickly reduces the downtime that would otherwise cripple regional exporters.
New frontiers: cyber, AI and business interruption
Aviation underwriters are now tracking threats that extend beyond traditional missiles. Ed Lluth of Liberty Specialty Markets warned that AI‑piloted drones can strike aircraft from thousands of miles away, a scenario for which insurers lack pricing models.
Neil Roberts of the Lloyd’s Market Association noted that cyber attacks often accompany physical assaults, blurring the line between separate policy exclusions. A recent S&P Global Ratings report flagged the Ukraine war, the Middle East conflict and potential Taiwan tensions as triggers for intensified cyber activity.
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In March 2026, medical‑technology firm Stryker suffered a cyber incident attributed to an Iran‑linked hacktivist group, disrupting its Microsoft environment worldwide. The breach illustrated how state‑aligned actors can target critical infrastructure, prompting insurers to revisit “hostile cyber operation” exclusions.
Business interruption claims are also expected to rise. The war’s effect on aviation, travel, hospitality, energy and logistics creates a complex web of policy language, with many exclusions for war and terrorism. As disputes over coverage grow, insurers may face litigation similar to that seen after the COVID‑19 pandemic.
While the market adapts, experts stress that the ultimate test will be the ability to quantify emerging risks. Oscar Seikaly of NSI Insurance Group said that once risk becomes measurable, capital returns, showing the importance of data and technology in underwriting.
In the broader picture, the resilience of war‑risk underwriting hinges on continuous collaboration between governments, reinsurers and brokers, ensuring that even in volatile regions, trade can persist under a framework of shared risk.
