Global Insurance Industry Reassesses Risk Amid Israeli Offensive on Iran

Israeli military operations against Iranian nuclear and military sites are expected to continue for up to two weeks, prompting significant concern across the global insurance sector, particularly in aviation and maritime domains.

The campaign, characterized by extensive airstrikes, has led to heightened geopolitical risks affecting underwriting strategies for regional exposure. Israeli and neighboring airspace restrictions have caused widespread flight disruptions, with nearly 2,000 European flights affected and key airports like Ben Gurion shutting down, resulting in a spike in war risk and business interruption insurance claims.

Airlines including Lufthansa, Emirates, and Air India are rerouting or suspending flights, driving up operational costs and triggering a rise in short-term aviation insurance premiums. Concurrently, marine insurers are closely monitoring transit conditions through critical corridors such as the Strait of Hormuz, where the risk level has been elevated due to the possibility of wider conflict escalation. The Strait remains a vital artery for global oil supply, and any disruption could lead to substantial adjustments in shipping insurance coverages.

Market volatility has surfaced with increases in crude oil prices and declines in transportation and logistics equity valuations, signaling broader economic impacts. Key insurers and reinsurers globally are conducting thorough reviews of aggregate exposures in the affected regions to recalibrate risk models and coverage limits amid unfolding developments. This escalation follows a period of ongoing geopolitical tension in adjacent regions and represents a complex challenge for the insurance industry, necessitating scenario planning and adaptive risk management to mitigate conflict-associated volatility.