Reinsurance capacity in the Gulf is tightening, with marine hull rates set to rise 25-50% and a $20 billion US-backed facility entering the market following war-risk coverage withdrawals.
The contraction in available cover follows action by members of the International Group of P&I Clubs to cease war-risk insurance for vessels operating in and around Iran, including the Strait of Hormuz and the Persian Gulf, effective March 5, 2026. The withdrawal affects a corridor that carries close to one-fifth of global oil flows and has already disrupted shipping activity, with reports indicating more than 150 vessels stranded following recent cancellations.
P&I cover plays a central role in global shipping, providing third-party liability protection for risks such as pollution, cargo damage, and crew injury. Without it, shipowners face open-ended liabilities, often halting voyages in high-risk areas. Industry reports note that war-risk exclusions in previous crises led to reduced traffic and higher freight costs, a pattern now re-emerging in the Gulf.
Some underwriters have also cancelled annual hull war policies under standard seven-day notice clauses, while remaining cover is being offered at significantly higher rates. War-risk premiums that were around 0.25% of vessel value have increased multiple times, limiting the commercial viability of transit for some operators.
The US government has moved to address capacity constraints through a reinsurance facility launched in March 2026. Led by the US International Development Finance Corporation in coordination with the Treasury, the program will provide up to $20 billion in cover for marine hull and cargo risks, including war exposure, for eligible vessels. The facility is intended to support shipping activity through the Strait of Hormuz, where trade flows have been disrupted by recent strikes involving the US, Israel, and Iran.
Details on eligibility criteria remain limited. The initiative follows concerns that insurance availability, rather than physical blockades, was restricting transit. Market participants, including the Lloyd’s Market Association, have noted that insurance has continued to be available, though at elevated rates, with most vessels still insured through the London market.
The reinsurance response is unfolding against a broader reassessment of risk across the Middle East and Africa (MEA). According to GlobalData, reinsurers are repricing exposures across marine, aviation, energy, and political violence lines while maintaining coverage continuity where possible. The conflict is affecting the sector through both direct exposure to loss events and indirect pressures, including higher reinsurance costs, capital flows, and inflation.
Regulators are also flagging spillover effects beyond the region. Nigeria’s insurance regulator, NAICOM, has warned that rising global claims linked to the conflict could lead to higher reinsurance costs at upcoming renewal cycles. Nigerian insurers, which rely on offshore capacity for large and complex risks, may face pricing adjustments driven by global loss experience rather than domestic conditions. Major global reinsurers such as Swiss Re, Munich Re, Lloyd’s of London, Allianz, AXA, and GIC Re play a role in determining those rates.
GlobalData data shows that reinsurers in the MEA region generated $4.4 billion in premiums in 2024, accounting for 1.1% of global reinsurance premiums, with a 7.1% CAGR recorded between 2020 and 2024. A prolonged conflict is expected to affect revenue growth over the next few years.
The market remains concentrated, with the top five reinsurers accounting for 64.1% of premiums. African Re increased its share from 25.2% in 2023 to 27.2% in 2024. Middle Eastern reinsurers represented 20.7% of premiums, with Saudi Re, Kuwait Re, and Oman Re contributing a combined 15.7%.
Exposure to regional risk varies. African Re and Arundo Re derive about 87.5% and 80% of their business from the MEA region, while Saudi Re generates about 42.5% locally and 57.5% from international operations.
“Reinsurers across the MEA region face mounting pressure. Countries such as Iran, the UAE, Saudi Arabia, Qatar, Bahrain, Oman, Iraq, Kuwait, and Israel are currently grappling with missile and drone strikes, airspace closures, and trade-route disruptions. Specialized insurance lines - marine, aviation, war risk, hull, cargo, and energy - are seeing sharp premium hikes, policy cancellations, and tighter war-risk exclusions amid rising losses,” said Manogna Vangari, insurance analyst at GlobalData
The disruption is also prompting operational adjustments. Reinsurers are increasing the use of artificial intelligence to support underwriting and pricing, while regulatory changes in markets such as Saudi Arabia are requiring improvements in operational risk and data management.
New structures, including parametric triggers and modular policies, are being deployed alongside traditional cover, with participation from insurtech firms, financial technology providers, and alternative capital sources.
“Reinsurers in the MEA region are generally operating with strong capital buffers. However, they face severe challenges in specialty lines, including marine, aviation, political violence, energy, and trade credit. Their responses so far have been defensive: demanding higher premiums, tightening terms, and reducing capacity. While immediate risks are manageable as long as conflict remains limited in scope and duration, a prolonged or escalated scenario could place serious stress on reinsurance markets and local insurers across the region,” said Vangari.
