Fitch Ratings, the international credit rating agency, said the withdrawal of hull war risk marine insurance coverage in the Persian Gulf is expected to be credit negative for US property and casualty insurers with significant exposure to Gulf shipping routes.
Fitch notes that the move is likely to have broadly neutral implications for large, globally diversified re/insurers whose marine war portfolios represent only a small share of overall business.
According to Fitch, the extent of any rating impact over the next 12 months will depend largely on how losses develop and how long shipping disruptions persist. The agency said earnings volatility and capital strength will be the main factors differentiating credit outcomes among affected insurers.
Fitch said specialist underwriters with double-digit premium exposure to Gulf transit face the greatest pressure. The agency noted that while war risk pricing has increased sharply, the potential loss of policy volumes could offset the benefit of higher rates. Fitch added that these insurers may also encounter greater earnings variability, uncertainty around reserves and possible capital strain if claims emerge.
By contrast, Fitch said well-diversified global rei/nsurers with marine war exposure below around 5% of total premiums and strong capital buffers are unlikely to face significant rating pressure from potential losses.
Fitch pointed to significant asset exposure in the region. Data from Skytek indicates that roughly $22.5 billion of vessel value is currently exposed in the Persian Gulf. Fitch said the risk arises from the possibility of vessels being damaged, destroyed or seized, particularly high-value oil tankers and cruise ships. The agency estimates that industry losses linked to the current crisis could exceed $5 billion if several large vessels were declared total losses.
Fitch said the most immediate threat for insurers relates to vessels transiting the Strait of Hormuz. The agency noted that the waterway carries about 20% of global oil supply and liquefied natural gas flows, as well as roughly 30% of globally traded nitrogen fertiliser. Fitch noted that ship movements through the region have been limited since the conflict intensified, which may reduce the frequency of near-term claims but increases the concentration of exposure among vessels already in the area.
Fitch added that if the effective closure of the route extends beyond six months, the risk profile could worsen as vessels become stranded in the region. Under standard policy conditions, Fitch said insurers may face total loss claims for vessels that remain seized and are not released within 12 months.
The agency highlighted that marine war risk premiums have risen sharply while available capacity has tightened. The agency noted that many insurers have cancelled existing hull war policies or stopped writing new business in the Persian Gulf following the escalation of tensions. However, Fitch also said the strong level of reinsurance capacity entering 2026 may limit the scale of further pricing increases.
According to Fitch, elevated premiums are likely to persist through the end of 2026. The agency said this may support underwriting margins for insurers that maintain selective exposure to the region, although reduced volumes and uncertainty over future government intervention could limit the overall benefit.
Fitch also highlighted support measures from the US government. Through the US International Development Finance Corporation, the government has committed up to $20 billion in rolling reinsurance capacity for hull, machinery war risk and cargo insurance covering Gulf transit. Fitch said this support could help limit extreme tail losses for participating insurers.
However, Fitch cautioned that the availability of government-backed reinsurance could also crowd out private market capacity once the immediate crisis eases. Over the longer term, Fitch Ratings notes this could place pressure on underwriting volumes and pricing for marine insurance specialists.
