Marine, aviation, cyber, and terrorism insurers face immediate underwriting pressures and potential accumulation losses as a result of heightened hostilities between Iran and Israel, according to Morningstar DBRS.
In addition, the report said, reinsurance capacity in certain business lines could tighten in a prolonged Iran-Israel conflict, increasing capital charges for primary carriers.
“The Iran-Israel conflict represents a multifaceted challenge for the global insurance industry, touching nearly every property and casualty (P&C) business line and asset class,” said the credit agency in its report, titled Middle East Tensions Add Underwriting and Investment Risks for Global Insurers and Reinsurers.
“While higher premiums in marine and aviation may offer some short-term underwriting relief, the accumulation of risk exposures across war, cyber, travel, and political risk lines presents meaningful capital pressure for many insurers,” the report said. At the same time, investment portfolio volatility can threaten capital buffers and solvency margins.
However, companies with strong reinsurance protection, conservative investment allocations, and proactive enterprise risk management frameworks will be better positioned to weather the volatility.
The report dove into the industry segments with the most exposure to the conflict in the Mideast: marine, aviation, and cyber, as well as broader P/C risks in the area of property, political, and supply chain risks.
Surging Marine War-Risk Premiums
The report explained that marine insurance is often the first line of insurance business to react in a geopolitical crisis. “Beyond Israeli ports, the broader Middle Eastern region has seen significant risk repricing. Ships transiting the Red Sea, the Strait of Hormuz, and the Persian Gulf, which are all critical global energy trade chokepoints, are facing rapidly rising premiums.”
