Fitch Ratings points to the Iran conflict as a direct pressure point for the London market and global specialty insurers, where exposure sits across marine and aviation war cover, political violence, trade credit, and energy lines.
Those segments carry concentrated risk tied to shipping routes, infrastructure, and geopolitical escalation, which places specialty carriers closer to potential losses than broader insurers.
The agency expects limited rating impact if the conflict remains contained and avoids major disruption to oil production or transport infrastructure, though the outlook shifts fast if the situation drags on.
Fitch frames the current scenario as manageable at existing rating levels, since most standard policies exclude war risk, leaving only niche markets exposed unless the conflict expands in duration or scope.
Indirect effects sit closer to the centre of concern. Loss cost inflation, falling asset values, and rising defaults could filter through balance sheets over time, especially if financial markets turn volatile or energy prices spike.
We think those second-order pressures tend to build quietly, then hit earnings unevenly across portfolios.
War exclusions across property, business interruption, and cyber policies limit direct claims exposure, so headline losses stay contained for most insurers.
Fitch expects initial claims booked in Q1 2026 to provide early signals, though comparisons with the Russia-Ukraine escalation suggest the overall earnings impact stays modest unless conditions worsen.
Capacity in war-risk markets has already tightened. Pricing moved sharply higher, with marine and aviation cover in the region either withdrawn or rewritten at elevated rates, pushing premiums for vessels transiting the Strait of Hormuz up to 20 times typical levels of around 0.25% of insured value.
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That kind of repricing reflects correlated risk across fleets operating in the same corridor, where a single event hits multiple insured assets at once.
War risk cover remains mandatory at Lloyd’s for vessels passing through Joint War Committee listed areas, including Hormuz, which keeps demand in place even as pricing spikes.
According to Beinsure, around 1,000 vessels operate in the Gulf region with aggregate hull values exceeding $25bn, and a single loss can reach several hundred $mn depending on cargo and vessel type.
Marine protection and indemnity cover adds another layer, including pollution liability, often capped near $500mn per event.
Aggregation risk stays elevated given vessel density in the region, so one incident, especially involving oil cargo, escalates quickly across multiple policies.
Aviation war cover addresses physical damage and confiscation of aircraft, though it excludes business interruption, which limits exposure but still leaves fleets vulnerable to direct asset loss.
Marsh estimates near-term rate increases for marine hull insurance in the Gulf could range between 25% and 50%, reflecting tighter underwriting conditions and rising perceived risk.
Fitch also flags political violence and terrorism cover as a potential trigger, particularly where infrastructure comes under threat.
Data centres and energy facilities across Gulf Cooperation Council countries sit within scope, and while losses remain contained so far, further strikes raise the probability of larger claims.
Trade credit and political risk insurers face a different path of exposure. Disruption to trade routes or sustained energy price shocks could drive insolvencies among corporates tied to Gulf logistics, especially in energy, petrochemicals, and transport sectors.
Standard exclusions limit direct war exposure, though credit deterioration still feeds through claims over time.
The agency notes Gulf insurers rely heavily on reinsurance, though global reinsurers have trimmed exposure to the region in recent years.
For diversified reinsurance groups, the conflict reads more as an earnings event tied to specialty lines rather than a capital shock, at least under current assumptions.
That said, correlated losses remain the pressure point. If the conflict extends or triggers broader financial instability, volatility rises across underwriting and investment portfolios, which could start to weigh on capital positions. The direction depends less on isolated claims and more on how long disruption persists, and how far it spreads.
