Kennedys, the international insurance law firm, warned the market to brace for a rare multi-line loss event tied to the widening confrontation between the United States, Israel and Iran.
We think the firm chose its language carefully. Multi-line events strain capital, retrocession, patience.
The firm traces the escalation to U.S. and Israeli air strikes on Iranian targets, operations which reportedly killed senior regime figures including Ali Hosseini Khamenei.
Tehran answered with missile and drone attacks across the Gulf and into Israel. Geography expanded. So did insured exposure.
Kennedys argues the removal of senior leadership has not clarified the conflict’s direction.
Instead, retaliatory strikes have hit sites in the United Arab Emirates, Qatar, Bahrain, Kuwait and Saudi Arabia, alongside Israel and Cyprus. Missile defence systems intercepted many projectiles. Some broke through.
Reports point to damage across civilian and commercial property, retail complexes, hotels, ports, airports, energy infrastructure, LNG facilities.
If the objective centers on economic disruption, insured assets sit in the blast radius. Political violence carriers now model accumulation scenarios across multiple territories, not a single city.
In the Gulf, many primary political violence policies sit with local insurers and flow into London through reinsurance treaties. Losses travel.
Aggregation disputes follow, especially if underwriters debate whether successive strikes form one coordinated campaign or separate events.
According to Beinsure analysts, wording around hours clauses and event definitions will drive recovery.
Marine underwriters already face pressure. Large parts of the Red Sea, Gulf of Aden and Persian Gulf fall within excluded areas under hull war policies, forcing insureds to negotiate bespoke terms.
Liability markets, including fixed premium P&I and charterers’ liability, have issued cancellation notices for certain territories, with reinstatement offered on revised pricing and conditions.
Kennedys cites attacks on vessels in the Strait of Hormuz and off Oman, with casualties and structural damage reported. A strike on a laden tanker would trigger pollution liabilities at scale.
Even without physical loss, closure of Hormuz, reportedly announced by Iran’s Islamic Revolutionary Guard Corps, raises delay and detention exposures and broader supply chain disruption.
Iran has detained vessels before. The firm expects further politically motivated seizures. If ships remain trapped in the Persian Gulf, owners may pursue loss of hire claims.
After 12 months of detention, constructive total loss provisions often activate. Owners and charterers won’t agree quietly on voyage orders into contested waters, off-hire triggers, frustration arguments. Disputes are baked in.
Navigation risk adds another layer. Ships sometimes disable AIS for security, increasing collision probability. GNSS and GPS interference, observed in the region and in the Baltic and Black Seas, impairs navigation systems and raises grounding risk. One incident compounds another.
Cargo interests face parallel exposure. Kennedys estimates roughly 135,000 containers worth about $4 bn transit the region. Diversion around the Cape of Good Hope increases cost and transit time.
Delay exclusions in cargo wordings may collide with war risk extensions. Classification of events as war or terrorism shapes recovery.
Airspace closures across Qatar, the United Arab Emirates, Bahrain and Kuwait have grounded fleets. Missile activity reportedly affected airport infrastructure in Dubai, Abu Dhabi, Bahrain and Kuwait, leaving aircraft exposed on the ground.
Aviation war underwriters may attempt to amend territorial limits, yet recent High Court reasoning in AerCap Ireland Limited & Others v AIG & Others [2025] suggests timing and policy wording determine when a war peril attaches. Once attached, notice periods matter.
Energy markets sit at the center of systemic risk. About 20% of global crude and LNG shipments pass through Hormuz.
Reports indicate Qatar halted LNG production after attacks on facilities, and Saudi Arabia paused operations at the Ras Tanura refinery following a drone strike. Oil and gas prices reacted fast.
According to our data, volatility feeds directly into insured credit and political risk exposure.
A prolonged closure of Hormuz would extend consequences well beyond the Gulf. Higher oil prices pressure inflation and growth, which in turn strain obligors.
Trade credit insurers face rising default risk if private buyers fail or sovereign energy importers struggle with repayment. Even without a global recession, contract frustration claims loom where shipping halts or energy output drops.
Kennedys also flags political risk exposure for forced abandonment. Multinationals withdrawing staff and suspending operations due to security deterioration may seek recovery under those covers. Capital leaves first. Claims follow.
