The Iran conflict adds to a series of recent geopolitical crises that have already pressured marine and aviation insurers’ profitability, with Morningstar DBRS stating that reinsurers are likely to respond by raising attachment points or reducing capacity, increasing retention for primary carriers.
On 28th February 2026, the US and Israel carried out coordinated strikes on Iranian military targets. In response, Iran launched missiles and drones at US bases and regional allies. The escalation spread into the Gulf, temporarily shutting down airspace over Iran, Iraq, Kuwait, Israel, Bahrain, the UAE and Qatar and closing major international airports. The conflict has also led maritime authorities and carriers to halt traffic through the Strait of Hormuz, a chokepoint for roughly one-fifth of global crude oil and seaborne gas flows.
In its recent report, Morningstar DBRS said these developments pose significant underwriting and investment challenges for marine, aviation, property, travel and supply-chain insurance lines, noting that they could increase earnings volatility and pressure solvency for global re/insurers.
“Higher premiums offer some temporary cushion, but accumulating war-risk exposures, investment portfolio volatility, and potential correlated losses could affect insurers’ credit profiles,” said Morningstar.
While surging war-risk premiums may support earnings, concentration risk in narrow corridors such as the Strait of Hormuz, alongside the risk of simultaneous losses across multiple lines, increases underwriting volatility. For instance, an insurer providing marine coverage may also write property, political violence, aviation or travel coverage, meaning a single geopolitical event could trigger multiple claims.
Morningstar added that firms without diversified portfolios, or those heavily exposed to Gulf risks, may face pressure on their credit ratings.
In marine insurance, Morningstar expects war-risk rates for vessels transiting the region to exceed 0.5% if hostilities extend beyond a few days. Underwriters may even refrain from quoting in the Gulf altogether if they view the risk as unquantifiable. Although higher premiums could temporarily support underwriting margins for specialist war-risk syndicates, these gains are likely to be offset by increased risk accumulation in the region.
Dylan Mortimer, Marine Hull UK War Leader at re/insurance broking group Marsh, recently estimated that Marine hull insurance rates in the Gulf could rise 25-50% due to the conflict.
Morningstar noted that if a large vessel were attacked and destroyed, insured losses could surpass $200–$300 million, including hull, cargo and liability claims.
“Reinsurers may respond by raising attachment points or reducing capacity, leaving primary underwriters retaining more risk and potentially pressure solvency levels. Insurers with diversified portfolios, conservative retention levels and robust reinsurance will be better positioned,” said Morningstar.
Regarding widespread flight cancellations and stranded passengers, travel insurers may see a surge in claims; however, they may rely on war exclusions to limit payouts.
From an aviation hull perspective, insurers must consider the risk that missiles or air-defence interceptors could result in large hull and liability claims.
Morningstar stated that airport closures and airport property exposures could lead to business interruption claims. Higher insurance prices and restricted capacity could further strain airlines already facing increased fuel costs and longer routes to detour around conflict zones.
Moreover, the report noted that the expansion of the conflict into the Gulf could prompt higher pricing and reduced capacity in terrorism and political violence insurance markets.
“Although these lines have seen improved underwriting results in recent years, the size of potential losses on iconic structures means reinsurers may tighten terms. For insurers with significant exposure to Middle Eastern property portfolios, capital buffers and reinsurance arrangements will be critical to withstand potential large claims,” said Morningstar.
Beyond the shipping and aviation sectors, the closure of the Strait of Hormuz disrupts global supply chains, which could increase demand for supply-chain disruption insurance. However, uptake remains low, and coverage often excludes war and political risk.
Despite these challenges, the report noted that most global re/insurers maintain strong capital positions and prudent risk management frameworks. Coinsurance arrangements and reinsurance programmes spread war-risk exposures among multiple carriers, limiting the impact on any single balance sheet.
“The Iran conflict adds to a series of recent geopolitical crises that have already pressured the profitability of marine and aviation insurers. While surging war risk premiums may support earnings, the concentration risk in narrow corridors, such as the Strait of Hormuz, and the risk of simultaneous losses across multiple lines increase underwriting volatility,” said Marcos Alvarez, Managing Director, Global Financial Institution Ratings. “Companies with diversified geographic and product mixes can absorb shocks better than those focused on Middle Eastern risks. Nevertheless, we will continue to monitor accumulation exposures, reinsurance programs, and liquidity management across our rated portfolio.”
