The London market is keeping war-risk capacity in place for clients exposed to the Iran conflict even as shipping and aviation operations across the region face severe disruption and sharply higher insurance costs.
Chris Jones (pictured), chief executive of the International Underwriting Association (IUA), said member companies remain active across multiple lines despite the fast-moving situation.
“Prior to the commencement of the current hostilities Iran and the wider Middle East was already an area of relative enhanced risk and insurance coverage in place will reflect this. IUA members are, however, continuing to provide cover for clients affected by the current hostilities in Iran across a number of lines of business,” he said.
For the insurance sector, the conflict has quickly become a live test of war‑risk wordings, sanctions clauses, aggregation controls and real‑time exposure management.
Cover in place, but trade stalled
Jones highlighted shipping in and around the Strait of Hormuz as the most visible pressure point, with cover available but many voyages halted on security grounds rather than a lack of capacity.
“Most prominent is shipping in the Straits of Hormuz where trade has been halted, not by a lack of available insurance, but by obvious safety concerns. The market for marine war risks is operating in the manner we would expect, given the increase in threats to shipping and insurers are focused on ensuring client can continue to access the cover they require,” he said.
The Strait normally carries a significant share of global seaborne oil and gas. As hostilities have escalated, shipowners, charterers and their insurers have reassessed exposures, leading to a sharp reduction in transits and a jump in additional war‑risk premiums. Market sources reported that rates for hull war cover in the wider Gulf have risen several‑fold compared to pre‑conflict levels, with seven‑day policies for large tankers now costing hundreds of thousands of dollars per voyage in some cases.
Some leading marine re/insurers have moved to cancel or restrict existing war‑risk cover for operations in Iranian waters and surrounding areas, forcing clients onto revised, more tightly underwritten terms. Other carriers are still quoting on a voyage‑by‑voyage basis, but with closer scrutiny of routing, port calls, ownership and compliance.
Joint War Committee listings and portfolio strain
The London market’s Joint War Committee has responded by expanding its Hull War, Piracy, Terrorism and Related Perils Listed Areas to encompass the Strait of Hormuz, the Persian/Arabian Gulf, the Gulf of Oman and adjacent waters. That step formally pushed many voyages into “named area” territory, where prior notification and specific agreement on terms is required and where pricing, deductibles and conditions can be adjusted at short notice.
However, existing accumulations from the Russia–Ukraine conflict in the Black Sea and continued attacks on vessels in and around the Red Sea were already pressuring capital and reinsurance costs. The Iran war adds another concentration of high‑severity risk, prompting fresh reviews of aggregates, reinstatement provisions and clash scenarios across marine, energy and cargo portfolios.
Reinsurance buyers face similar questions. Treaty and facultative markets are having to consider how much additional Gulf‑related war exposure they are willing to support and at what price, in a context where war‑risk losses and near‑misses have been building for several years.
Security intelligence, sanctions and compliance
Jones stressed that access to detailed and up‑to‑date security information is now central to underwriting decisions.
“With the situation rapidly evolving, it is important that in-depth, real time security advice is available. The London Market’s joint marine committees are working with expert consultants to provide underwriters with the latest information. We welcome any initiative to improve the security situation," he said.
Insurers are relying on naval advisories, live vessel‑tracking data and specialist risk‑consultancy feeds to assess specific voyages. At the same time, sanctions compliance has become a core underwriting concern, given long‑standing restrictions on Iranian entities and the prospect of further measures. Ownership‑disclosure requirements and sanctions warranties are tightening, particularly where vessels may be linked to shadow fleets or complex trading structures.
War‑risk focus as airspace opens and closes
Beyond shipping, Jones also pointed to the aviation market’s role in supporting evacuation and repatriation operations from affected areas.
“Elsewhere the London company market is also providing aviation cover to support flights transporting people away from the affected areas – both via existing flight routes and new repatriation operations. With airspace opening and closing, based on the assessment of aviation authorities, insurers are working with brokers, clients and third-party experts to closely monitor changes in risk," Jones said.
Airspace closures, diversions and sudden route changes have increased reliance on aviation war‑risk and liability cover for flights operating near the conflict zone. Additional war premiums are rising, and underwriters are demanding more detail on flight planning, overflight permissions and security procedures.
By contrast, many of the financial impacts of cancelled schedules and broader disruption fall outside standard policy wordings, adding to pressure on airline balance sheets.
Jones’s comments placed IUA members among those aiming to maintain continuity of cover while recalibrating pricing and terms to reflect a sharply elevated threat environment. How sustainable that balance proves will depend on the duration and spread of the conflict, as well as on whether major loss events emerge in the months ahead.
