Morningstar DBRS has warned that insurers with strong reinsurance protection, conservative investment portfolios, and active enterprise risk management (ERM) frameworks are better positioned to manage the ongoing volatility triggered by the escalating conflict between Iran and Israel.
The rating agency noted that Israel’s airstrikes on Iranian military and nuclear infrastructure, followed by Iran’s missile and drone retaliation, represent one of the most serious regional escalations in recent history.
Morningstar DBRS stated that this conflict presents broad implications for the global insurance sector, affecting nearly all property and casualty lines, as well as major asset classes.
The agency emphasized that the effects extend far beyond the combat zone. Key areas of disruption include marine shipping routes, aviation traffic, cybersecurity infrastructure, capital markets, and global supply chains.
Insurers underwriting marine, aviation, cyber, and terrorism risks face immediate pressure due to potential loss accumulation and elevated claims exposure.
Prolonged conflict could also tighten reinsurance capacity across affected lines, raising capital costs for primary insurers.
Morningstar DBRS stated that insurers’ financial stability will increasingly depend on their ability to manage capital effectively and maintain underwriting discipline.
Firms pursuing rapid growth in high-risk segments, those with low capital flexibility, or those heavily exposed to equity markets may face increased pressure on their credit rating outlooks if the conflict continues or escalates.
The agency concluded that the conflict serves as a reminder of the insurance industry’s growing function in absorbing geopolitical and systemic risks in an interconnected global environment.
Despite recent reports of a ceasefire, Israeli Defense Minister Israel Katz stated that he has authorized additional military strikes on Iranian regime targets in Tehran, citing violations of the truce.
Iranian state media rejected the allegation and denied that any post-ceasefire missile attacks had occurred.
