The ongoing Iran conflict presents limited near-term credit risk to global reinsurance markets, AM Best said in a commentary.
However, the rating agency cautioned that a prolonged war could lead to wider disruptions driven by inflation, supply chain breakdowns and volatile energy prices.
Direct reinsurance losses have so far been contained and are largely characterized by single large losses, AM Best said. War risks are commonly excluded from standard policies, and Iranian risks remain largely uninsured due to sanctions.
The agency noted, however, that continued hostilities could result in loss accumulations across countries and product lines.
The conflict is now in its third week following the start of US/Israeli military action on Feb. 28. GCC nations have halted or reduced oil and gas production, and the Strait of Hormuz remains nearly closed to commercial shipping.
The US Energy Information Administration estimates the waterway normally carries roughly a quarter of the world's seaborne oil trade and about a fifth of global LNG shipments. Oil and gas prices have surged, raising concerns about a resurgence in global inflation.
Marine, aviation, trade credit, business interruption and political risk lines have seen the most immediate effects. Marine insurers have moved to adjust rates and outline zones of concern spanning from the Strait of Hormuz to the Suez Canal.
In GCC markets, high-value commercial risks are typically placed through local insurers and heavily reinsured internationally. War risk and political violence riders are generally fully ceded to foreign reinsurers.
AM Best said gross exposures on significant facultative protections can substantially exceed capital and surplus, though high reinsurance dependence means net exposure accumulation should remain manageable.
Renewals represent a key inflection point. If the Iran conflict persists, reinsurers may reassess risk appetite, potentially driving higher pricing, tighter terms and adjusted commission rates. AM Best noted that regional insurers have limited capacity to absorb higher retentions given their small absolute capital size.
The US International Development Finance Corporation announced on March 3 that it would mobilize political risk insurance and guaranty products, including a maritime reinsurance facility covering losses up to approximately $20 billion on a rolling basis.
However, the facility does not yet cover third-party pollution liability, a gap that has left many shipowners reluctant to sail. Over 200 ships remain at anchor outside the Strait. DFC and Treasury said they are coordinating with CENTCOM on implementation, though questions remain about the availability of naval escorts.
The Iran conflict has also raised cyber concerns. AM Best warned that state-sponsored cyber activity could escalate, particularly targeting maritime and P&I segments.
The agency said it does not anticipate near-term rating actions but added that a conflict lasting several months could place significant pressure on both global and regional insurers.
