Morningstar DBRS, a global credit ratings, risk analysis, and financial research agency focused on banks, insurers, and financial institutions, says the financial impact of the ongoing Middle East conflict on global property and casualty (P&C) insurers remained limited during the first quarter of 2026, despite continuing disruption across the region and the closure of the Strait of Hormuz to standard shipping traffic.
In its latest commentary, Morningstar states that insured losses linked to the conflict have so far been largely contained within specialist insurance markets rather than the wider global P&C sector.
The company explains that most standard insurance policies exclude war-related events, meaning direct exposure is concentrated among insurers underwriting specialist products such as marine war risk, aviation war cover, political violence, terrorism, energy, trade credit, and cyber insurance.
According to Morningstar, known attacks on vessels, industrial sites, and energy infrastructure in the Gulf region have generated losses that remain manageable when measured against the capital strength and earnings capacity of major insurers and reinsurers. The company says the conflict has therefore not developed into a broader capital event for the industry.
Morningstar notes that geopolitical instability is also contributing to stronger demand for specialist insurance products. The company says businesses are increasingly seeking protection against political disruption, sanctions exposure, trade interruption, and energy-related risks, while insurers operating in these markets are benefiting from higher pricing and elevated war-risk premiums.
At the same time, Morningstar DBRS warns that a prolonged conflict could create wider economic pressures for insurers, including inflationary effects, weaker investment market performance, and rising claims costs linked to higher energy prices.
The company identifies marine war insurance as the area facing the greatest level of direct exposure because of physical damage risks, vessel seizures, and shipping disruption.
Aviation war cover and offshore energy insurance are also described as highly exposed because of airspace restrictions, infrastructure damage, and aggregation risks across energy operations. Political violence and terrorism cover has also been affected through claims tied to property damage and business interruption.
Morningstar explains that war-related insurance is generally provided through specialist markets rather than mainstream domestic insurers because these risks are difficult to diversify and price. The company notes that cover is commonly offered by large global insurers with specialist underwriting divisions, international reinsurers, and syndicates operating through Lloyd’s of London.
According to Morningstar, marine war-risk policies are frequently repriced during periods of escalating conflict through short-term cancellation provisions lasting 48 or 72 hours. The company says insurers may issue notices of cancellation to trigger renegotiation of premiums and policy terms rather than withdraw cover entirely. In practice, this often results in substantially higher pricing and tighter conditions for ships operating in affected regions.
The company adds that political violence and terrorism policies operate differently because cover generally remains in place for the duration of the contract, even if geopolitical conditions worsen after inception. However, Morningstar DBRS says renewal pricing for risks located in conflict-affected areas is expected to rise significantly.
Morningstar references recent comments from Lloyd’s, which stated in a market update published on 14 May 2026 that the Middle East conflict was not expected to become a capital event based on current exposure levels and the nature of losses reported so far.
The company also reviewed first-quarter disclosures from insurers and reinsurers that reported losses or reserves connected to the conflict. According to Morningstar DBRS, larger diversified insurance groups generally did not present the situation as a material underwriting issue because losses remained well within normal earnings tolerance levels.
Chubb Limited referred mainly to the broader economic implications of the conflict, including inflation and slower growth, without reporting material direct claims exposure. Similarly, Swiss Re disclosed no direct conflict-related losses but established a $400 million reserve to account for potential inflationary and supply-chain effects associated with the ongoing instability.
Among insurers with more concentrated specialty exposure, Morningstar highlights that Munich Re reported approximately €90 million in claims linked to the Iran war. The company stated that around €60 million related to Global Specialty Insurance, while roughly €30 million was attributed to property-casualty reinsurance operations.
Everest Group reported $90 million in pre-tax catastrophe losses, which the company said were “driven primarily by losses associated with the Iran War and a number of mid-sized events globally”.
Morningstar also cites disclosures from Markel Group, which said the “Middle East conflict” added two points to its combined ratio, representing an estimated $35 million impact. Convex Group disclosed “about a $23 million add-on for the Iran war”, while management indicated that increased regional pricing could help offset part of the loss burden over time.
According to Morningstar DBRS, International General Insurance (IGIC) reported $15 million in losses connected to the conflict, including a $10.5 million energy-related claim involving a vessel collision with an offshore platform after GPS systems and navigation lights were reportedly turned off during hostilities.
Meanwhile, Hannover Re stated that it had received notifications linked to the Iran conflict but said reliable loss estimates were not yet available because of continuing uncertainty.
Morningstar concludes that, based on disclosures made during the first quarter, losses associated with the Middle East conflict remain contained within specialist insurance lines and continue to be manageable for the global insurance and reinsurance sector overall.
The company also notes that if vessels remain trapped in the Strait of Hormuz for an extended period, shipowners may eventually seek constructive total loss claims even where no physical damage has occurred. Morningstar says a prolonged conflict could also contribute to further supply chain disruption, inflationary pressure, lower economic growth, and weaker underwriting profitability across parts of the wider insurance market.
Even so, Morningstar DBRS states that current market conditions continue to support stronger pricing and higher demand across specialist insurance classes including political risk, trade credit, marine war, and energy cover.
