The conflict in Iran has exacerbated a recent series of geopolitical crises that have put pressure on the profitability of maritime and aviation insurers, and Morningstar DBRS said reinsurers are likely to respond by increasing attachment points or reducing capacity and increasing retention rates at major carriers.
On February 28, 2026, the United States and Israel conducted coordinated strikes against Iranian military targets. Iran responded by launching missiles and drones at U.S. bases and regional allies. The escalation spread to the Gulf, temporarily closing the skies over Iran, Iraq, Kuwait, Israel, Bahrain, the United Arab Emirates and Qatar, and closing major international airports. The conflict also led maritime authorities and carriers to halt traffic in the Strait of Hormuz, a chokepoint for about a fifth of the world’s crude oil and offshore natural gas flows.
In its latest report, Morningstar DBRS said these developments pose significant underwriting and investment challenges for the maritime, aviation, property, travel and supply chain insurance businesses, noting that they could increase earnings volatility and create solvency pressures on global reinsurers/insurers.
“Higher premiums provide some temporary cushion, but accumulation of war risk exposure, portfolio volatility and potential related losses could impact insurers’ credit profiles,” Morningstar said.
While soaring war insurance premiums are likely to support earnings, concentrated risks in narrow corridors such as the Strait of Hormuz, and the risk of simultaneous losses on multiple lines, increase underwriting volatility. For example, an insurer offering marine insurance may also underwrite property, political violence, aviation or travel insurance, meaning a single geopolitical event may give rise to multiple claims.
Morningstar added that companies without diversified portfolios, or those with significant exposure to Gulf risks, could see their credit ratings come under pressure.
In marine insurance, Morningstar expects war risk rates for ships passing through the area to exceed 0.5% if hostilities continue for more than a few days. Underwriters may even avoid quoting in the Gulf altogether if they believe the risk cannot be quantified. While higher premiums may temporarily support underwriting profits for specialist war risk groups, these gains are likely to be offset by increased risk accumulation in the region.
Dylan Mortimer, head of UK Marine Hull insurance at re/insurance brokerage group Marsh, recently estimated that Marine Hull insurance rates in the Gulf could rise by 25-50% as a result of the conflict.
Morningstar notes that if a large vessel is attacked and destroyed, insured losses could exceed $200 to $300 million, including hull, cargo and liability claims.
Morningstar said: “Reinsurers may respond by increasing attachment points or reducing underwriting capacity, allowing lead underwriters to retain more risk and potentially putting pressure on solvency levels. Insurers with diversified portfolios, conservative retention levels and strong reinsurance will be in a better position.”
Travel insurance companies are likely to see a surge in claims due to widespread flight cancellations and stranded travelers; however, they may rely on war exclusions to limit payouts.
From an aviation hull perspective, insurers must consider the risk that missiles or anti-aircraft interceptors could result in substantial hull and liability claims.
Morningstar said airport closures and exposure of airport property could result in business interruption claims. Higher insurance prices and limited capacity are likely to put further pressure on airlines already facing increased fuel costs and longer routes around conflict areas.
Additionally, the report noted that the expansion of the conflict into the Gulf could lead to higher pricing and reduced capacity in the terrorism and political violence insurance market.
“While these insurers’ underwriting performance has improved in recent years, the scale of potential losses to iconic buildings means reinsurers are likely to tighten terms. For insurers with substantial exposure to Middle East real estate portfolios, capital buffers and reinsurance arrangements are critical to withstand potentially large claims,” Morningstar said.
Beyond the shipping and aviation sectors, the closure of the Strait of Hormuz has disrupted global supply chains, which is likely to increase demand for supply chain disruption insurance. However, adoption rates remain low, and coverage often excludes war and political risks.
Despite these challenges, the report notes that most global reinsurers/insurers maintain strong capital positions and prudent risk management frameworks. Co-insurance arrangements and reinsurance programs spread war risk exposure across multiple carriers, limiting the impact on any single balance sheet.
Marcos Alvarez, managing director at Global Financial Institutions Ratings, said: “The Iran conflict has exacerbated a series of recent geopolitical crises that have already put pressure on the profitability of maritime and aviation insurers. While soaring war risk premiums are likely to support earnings, concentrated risk in narrow corridors such as the Strait of Hormuz, and the risk of simultaneous losses on multiple lines of insurance, will increase underwriting volatility.” “Companies with diversified geographic and product portfolios are better able to absorb shocks than those focused on Middle East risk. However, we will continue to monitor accumulation risk, reinsurance programs and liquidity management across our rated portfolios.”
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