Escalating tensions in West Asia following the ongoing Iran-US-Israel conflict have sharply increased war risk insurance costs for both maritime and aviation sectors, as insurers reassess exposure amid missile threats, airspace closures and disruption risks.
Data from industry sources show that marine cargo war risk premiums for transits through the Strait of Hormuz have surged by 200-300%, with some extreme cases seeing increases of more than 1,000% as attacks and security risks intensify.
Premiums for tankers and vessels crossing the Strait of Hormuz have risen to around 3%-5% of vessel value, compared with 0.2%-0.5% before the conflict. In certain instances, ships have reportedly struggled to obtain coverage at all as some insurers withdraw from underwriting voyages through the corridor.
The insurance market has also tightened for airlines operating across Gulf and West Asian airspace. Aviation war risk premiums have increased by 50% to 500%, reflecting heightened concerns over missile threats, flight route disruptions and temporary airspace closures.
Darshan Parikh, Senior Director, Corporate Solutions Group – (Marine, Aviation and Space), Lockton India, told news18.com that recent geopolitical developments have fundamentally altered how insurers assess risk across both aviation and marine sectors.
“Recent geopolitical conflicts have fundamentally altered risk perception across both aviation and marine insurance. The latest strikes on March 1-2, 2026, triggered widespread airspace closures across the UAE, Qatar, Bahrain and Kuwait, leading to thousands of flight cancellations and diversions. For aviation insurers, this has significantly elevated concerns around airspace interdiction, operational disruption and accumulation risk across key transit hubs," he said.
Parikh added that maritime insurance markets have also tightened significantly as risks around the key oil shipping route increase.
“In marine insurance, Iran’s move to close the Strait of Hormuz sharply slowed vessel traffic, intensifying underwriters’ assessment of seizure risk, missile strikes and corridor shutdown scenarios. War risk exposure for hull, cargo and associated liabilities is now viewed as materially heightened, prompting rapid reassessment of coverage terms and pricing," he said.
According to him, the repricing underway in the insurance market is likely to reflect a deeper structural shift rather than a temporary spike.
“The repricing we are witnessing is structural rather than temporary. War risk premiums for transits through Hormuz are expected to increase substantially relative to hull values, although pricing remains fluid and highly situation-driven," he said.
He noted that vessels with US or Israeli ownership, cargo links or trade exposure are currently facing greater scrutiny from insurers as underwriting standards tighten.
Insurers are also responding to the rapidly changing risk environment by adjusting policy terms and strengthening internal safeguards.
“Insurers are managing this unpredictability through swift and decisive actions. War risk policies have seen rapid cancellation and renegotiation, in some cases even before markets fully reopened, with clauses such as 48-hour cancellation notices being invoked. Underwriting has become more selective, with certain exposures being declined outright," Parikh said.
At the same time, insurance companies are relying heavily on reinsurance protection and conservative investment strategies to maintain financial stability amid rising geopolitical risks.
He also pointed to broader changes underway in underwriting frameworks across specialty insurance lines.
“Geopolitical volatility has also led to permanent shifts in underwriting frameworks across speciality lines. Models now incorporate real-time exposure tracking, maritime and airspace threat intelligence, and AI-driven vessel monitoring. Automatic repricing triggers for designated conflict zones are becoming standard practice," he said.
According to Parikh, the speed with which insurers have repriced risk during the Iran–Israel escalation reflects the growing use of real-time intelligence data in underwriting decisions.
“The industry is clearly shifting from reactive claims-based models to predictive, intelligence-led underwriting. The speed of repricing during the Iran–Israel escalation underscores the use of real-time risk intelligence feeds, vessel route monitoring, drone and missile activity tracking, and airspace closure data to drive near-instant underwriting decisions," he said.
For airlines and shipping companies, the evolving risk environment could mean operational adjustments and higher costs in the near term.
Parikh said airlines may have to prepare for prolonged airspace closures and rerouting around Gulf transit hubs, while shipowners may need to factor in significantly higher war risk premiums and explore alternative shipping routes where feasible.