Travel insurers are scaling back coverage for destinations including the United Arab Emirates and Cyprus following disruption linked to tensions involving Iran, reducing options for policyholders, according to Defaqto.
Data fromt the market intelligence specialist shows some insurers have paused quoting for destinations such as Dubai and Cyprus, limiting available policies for travelers. This follows disruption across aviation networks linked to conflict in the Middle East.
Wider industry developments indicate that large-scale flight cancellations and airspace closures have affected global travel flows. Airlines suspended thousands of flights after military activity in the region, disrupting major transit hubs including Dubai, Abu Dhabi and Doha, according to CNBC. Aviation data showed 1,560 flights were canceled on a single day, representing about 41% of scheduled arrivals in Middle East countries.
The Middle East remains a central aviation corridor. It accounted for 10% of global international revenue passenger kilometres in 2025, while Dubai International Airport ranks among the busiest globally for passenger traffic.
Guidance from the Association of British Insurers (ABI) states that many travel insurance policies exclude losses linked to war. Disruption-related expenses such as unused accommodation, excursions or transport may not be covered if tied to conflict. The ABI also notes that traveling against advice from the Foreign, Commonwealth & Development Office (FCDO) could invalidate cover.
Industry reporting shows that these exclusions extend beyond direct conflict zones. Secondary effects such as airspace closures and rerouted flights can also fall within war-related exclusions, leading to denied claims even when disruption occurs outside the immediate area of conflict, according to Forbes.
The scale of such events presents a structural challenge for insurers. War-related losses are typically excluded due to the potential for large volumes of claims arising simultaneously, which can affect insurer solvency.
Read more: The Iran War's hidden insurance crisis
Some policies offer optional upgrades, including “cancel for any reason” coverage, which can allow partial reimbursement of nonrefundable costs. However, these options can increase premiums by 40%–50% and typically reimburse only 50%–75% of expenses. Conditions also apply, including purchase windows tied to initial trip deposits.
Specialized business travel insurance may include limited war-related protections, though such coverage is not standard and involves additional cost. Certain insurers have introduced exceptions to standard exclusions in specific cases, though these are not widely adopted across the market.
Market conditions have added to cost pressures. Brent crude has risen above $115 per barrel, while the Strait of Hormuz continues to carry about 20% of global oil supply.
Europe’s aviation sector remains linked to supply from the region, with 25%–30% of jet fuel demand typically sourced from the Persian Gulf. Airspace restrictions have led to longer routes and higher operating costs for airlines.
Stephen Kennedy, director at Defaqto, said these factors are feeding into travel pricing. “The immediate impact of conflict involving Iran is disruption to aviation and energy markets, and that feeds directly into the cost of holidays. Airspace closures mean longer flight routes and higher fuel costs, while geopolitical tension tends to push up oil prices more broadly. As we’ve seen with previous conflicts, those pressures can feed into wider inflation, increasing costs across the travel sector.”
Claims outlook shaped by indirect effects Kennedy said most standard travel policies are not designed to cover losses arising directly from war, though indirect effects remain relevant for insurers.
“For insurers, most standard travel policies are not designed to cover losses arising directly from war. But the knock-on effects are significant. Higher medical costs abroad, more disruption and changing traveller behaviour can all add to claims costs over time, which can put upward pressure on premiums,” Kennedy said.
He said consumers should review both official travel advice and policy terms before making arrangements. “Travellers should not assume that disruption linked to conflict will automatically be covered by their policy. The first thing to do is check the latest FCDO advice, and then check carefully with the insurer what is and is not covered.”
The FCDO is advising against all but essential travel to the United Arab Emirates, while its advisory for Cyprus cites security risks and disruption linked to regional escalation.
“The key issue now is that this is no longer only a regional geopolitical story. It is becoming a personal finance story too, affecting the affordability of holidays, the availability of cover and the confidence people have when booking,” Kennedy added.
