The political violence (PV) insurance market faces intensifying pressure in the Middle East with escalating military actions threatening to disrupt commercial operations, leading to further “significant claims” from Gulf states as PV business written before late February remains on risk, warns Antares’ Wesley Selwyn.
In a recent commentary, Selwyn, Class Underwriter for Political Violence and Terrorism at specialist Lloyd’s syndicate, Antares, warned that with “no one backing down” following the current renewed wave of strikes, the number of incidents in the Middle East may rise again, leading to more claims.
The recent exchange of strikes between the United States and Iran has underscored how unstable the region remains, with the damage and loss of life at Kuwait International Airport serving as a clear reminder that the crisis in the Middle East is barely paused.
“What began a little over three months ago when the US & Israel launched attacks on Iran is far from resolved and has the potential to re-escalate at any moment,” said Selwyn.
He continued: “With mixed messages coming from the leadership on both sides a permanent ceasefire appears some way off. The Lebanon issue appears to have become Israel’s primary focus for the time being as they continue to strike the south of the country. Iran’s insistence that any lasting end to the conflict must include Lebanon has the potential to draw negotiations out further – giving time for more strikes from either side.”
Operational vulnerabilities extend deeply into global trade routes, with the status of the maritime passages remaining a critical friction point.
Selwyn noted that “both the US and Israel need the Strait of Hormuz to open but neither side seem likely to back down first.”
For the specialty insurance market, the financial exposure remains exceptionally high. Underwriters hold substantial volumes of PV business written before the events of February 28th, which are still actively on risk.
Selwyn explained: “With vast amounts of PV business written before the events that followed 28th February still on risk in the region, and with many markets adding further exposure, at increased rates, following the initial strikes on Iran and their widespread retaliation, there remains the risk of further significant claims from the Gulf states.”
He concluded: “The incident at Kuwait’s International Airport will have affected not only the operations of the airport and the airlines that use it but also businesses within the terminal building raising the possibility of claims on extensions such as Denial of Access or Loss of Attraction, as well as the standard coverage for Property Damage and Business Interruption. Regardless of whether the airport was deliberately targeted or not; the risk to insureds remains very real.
“PV insurers need to be very mindful that the drop in notified incidents may increase again before this is over.”
