Fitch Ratings expects the Iran conflict to remain primarily an earnings event for global insurers and reinsurers, with limited rating impact, so long as hostilities are short-lived and major oil and shipping infrastructure are not significantly damaged.
The ratings firm said war is generally excluded from standard property/casualty and specialty policies, meaning direct insured losses should be modest and manageable. The greater risk for ratings, however, lies in second‑order effects if the conflict drags on – including higher loss‑cost inflation, weaker asset values, rising credit defaults and potential downgrades of exposed sovereigns and banks that feed through to insurer balance sheets.
Fitch identified London market and global specialty carriers as the most exposed to direct conflict‑related claims, especially in marine and aviation war, political violence and terrorism, energy, and trade credit and political risk.
The agency does not expect significant payouts under standard property, business interruption or cyber wordings, where war exclusions are common. That will be a key point of friction as insureds probe coverage intent, and reinforces the importance of clear communication by brokers and claims teams.
War‑risk markets have already tightened, with sharp repricing and reduced capacity as insurers reassess aggregations and sanctions risk. Initial first‑quarter 2026 loss notifications will provide an early view of the earnings impact, but Fitch currently expects this to be “limited for most insurers,” drawing parallels with the market’s experience during the 2022 escalation of the Russia–Ukraine war.
Marine war exposures around the Strait of Hormuz are a particular concern. War cover is compulsory at Lloyd’s when vessels transit Joint War Committee‑listed areas, including Hormuz. According to Fitch, war‑risk marine and aviation policies have been canceled and rewritten at much higher rates, with premiums for some voyages reportedly rising to as much as 20 times historic levels of around 0.25% of insured value.
The agency estimates roughly 1,000 vessels are currently in the wider Gulf region, with aggregate hull values exceeding US$25 billion. The loss of a single large vessel could generate a hull claim in the hundreds of millions of dollars, depending on ship type and cargo. Marine war protection and indemnity policies would also respond to pollution liabilities in the event of a major oil spill, though this exposure is typically capped at US$500 million per event.
The concentration of high‑value tonnage in a relatively constrained area heightens aggregation risk for primary markets and reinsurers, and is driving closer scrutiny of limits, navigation clauses and accumulation controls.
Fitch also highlighted political violence and terrorism wordings – often bought as part of broader property programs – as a potential loss driver. These covers could be triggered by damage to assets in Gulf Cooperation Council (GCC) states, including data centers, logistics hubs and energy‑adjacent infrastructure that had previously been viewed as comparatively low‑risk. While the agency believes losses here have been limited so far, it warned that further strikes on key infrastructure remain a “significant risk” and should prompt underwriters to revisit accumulation assumptions.
On the credit side, trade credit and political risk carriers could face claims if energy price shocks or trade disruption lead to insolvencies among companies tied to Gulf trade routes. Standard war exclusions curb direct exposure to conflict events, but Fitch points to vulnerabilities in energy, petrochemicals and transportation sectors, particularly in Asian economies heavily reliant on Gulf hydrocarbon imports. Underwriters may respond with tighter country and sector limits and more conservative deal structures.
Gulf insurers remain heavily reinsured, but Fitch noted that global reinsurers have already reduced their regional exposure in recent years. For large, diversified reinsurance groups, the conflict is currently viewed as an earnings event concentrated in specialty lines, rather than a capital‑threatening shock.
That view could change if the conflict proves more prolonged or disruptive than assumed. A broader macroeconomic shock – for example, a sustained hit to global growth or capital markets – would amplify pressure through both liability and asset channels, potentially increasing earnings volatility and, in a severe scenario, straining capital.
For now, Fitch’s base case is that direct insured losses will stay manageable and that any rating actions would more likely be driven by indirect effects, including shifts in sovereign and bank credit profiles, than by immediate war‑related claims. Insurers with concentrated regional or product exposures in affected lines will nonetheless be under close scrutiny as events in and around the Gulf continue to unfold.
