According to Howden, the political violence and terrorism (PV&T) reinsurance market faced an “unusually dynamic” environment during the 1 July renewal season, as underwriting appetite in the Middle East was reshaped and broader shifts in global risk, ranging from civil unrest in the Americas to active assailant events in Europe, added further complexity for both incumbent carriers and new market entrants.
“In the immediate aftermath of the escalation of Middle East strikes, most in the region took a ‘pens down’ approach to new enquiries. Since then, appetite has gradually reopened, though unevenly,” Howden explained.
The US and Iran are currently in a fragile diplomatic transition following an intense, multi-month military conflict. Diplomatic progress and military tensions continued to clash this week as US and Iranian delegations concluded a critical round of indirect talks in Doha.
Yesterday, the two sides established a direct emergency hotline to prevent accidental escalation and finalised a mechanism for Iran to access $6 billion in unfrozen assets for humanitarian goods.
However, the situation remains highly volatile. A maritime incident disrupted shipping in the Strait of Hormuz, while Iran’s military threatened to extend its ballistic missile range. The core dispute over transit fees in the strategic waterway also remains unresolved.
Wajih Tabbara, Head of Property, Construction & Political Violence, Howden Re Dubai, commented, “The market has moved quickly, and continues to move. What we are seeing is a market working through the consequences of a significant loss event in real time.
“Limited capacity, tighter controls, and underwriting decisions are being made against a target list that can change within 24 hours. For clients in high-exposure territories, the priority is securing cover now, with clean risk data and a clear narrative around exposure management.”
The firm said that several markets that were previously closed have revised their positions, while others are now only reviewing firm orders, a reflection of the volume of inbound business, with some reinsurers receiving in excess of 50 submissions per day.
Howden continued, “In the Middle East, many reinsurers are currently declining risks involving Western interests and certain critical infrastructure sectors: airports, oil refineries, desalination plants, ports and similar exposures.
“Acceptable occupancies remain difficult to define with precision, given that strike target lists continue to evolve on a near-daily basis. Capacity is being deployed in deliberately limited line sizes, with single-location risks and smaller limits achieving significantly greater success than large, multi-location programmes.”
Howden observed that the PV&T market is already experiencing upward pressure on rates, tighter underwriting controls, reduced line sizes, and increased attachment points.
Meanwhile, risks in perceived high-exposure territories face continued challenges in securing broad coverage and adequate capacity, particularly for standalone Political Violence placements.
However, amid this, a new dynamic is said to be emerging. Howden stated that new capacity entering the market, notably from recently established MGAs and syndicates setting up PV&T as a line of business.
“Despite the current volatility, markets with established regional expertise and disciplined exposure management continue to selectively deploy capacity, particularly on well-protected risks with strong risk management standards and clear exposure data,” the firm added.
While the Middle East continues to dominate the PV&T narrative, Howden also highlighted that conditions in the wider market warrant equal attention.
The firm continued, “Premium income across the class is estimated at around USD 1.5 billion globally, set against insured loss estimates that are already approaching double that figure. That imbalance has implications well beyond any single geography.
“A pattern of smaller, geographically dispersed incidents is building alongside the major conflict scenarios. Civil unrest events, active assailant incidents, and riot activity have been recorded across the Americas, Europe and Africa in recent years. The cumulative attrition from these events is increasingly material to overall class performance.”
Olivia Pullen, Director, Terrorism and Political Violence, Howden Re London, said, “The class is entering a new phase. The large-scale conflict scenarios in Ukraine and the Middle East are well understood by the market, but what we also need to be increasingly focused on is the accumulation of smaller events happening in pockets across the world.
“These incidents are sometimes less visible individually, but they add up. There aren’t many territories now genuinely considered risk-free from a PV&T and extended perils perspective. Disciplined, globally-diversified underwriting has never been more important.”
Looking forward, Howden has suggested that, depending on the duration and scale of further escalation in the Middle East, regional treaty aggregates are expected to come under increasing stress.
If sustained, this could prompt retrocession markets to adopt a more cautious approach to capacity deployment, accumulation management, and overall exposure to PV&T risks within the region.
