The business of insuring conflict
From missile strikes and cyber-attacks to disrupted shipping lanes and AI-powered warfare, today’s conflicts are reshaping the global insurance market. As claims mount across marine, aviation and cyber cover, insurers are being forced to adapt to a far more volatile and unpredictable world. David Worsfold reports
July 29, 2026
The war in the Middle East has thrust war risk insurance into the spotlight with claims for damaged and trapped ships, property damage, aviation and cyber-attacks already mounting up. Further down the line there will be claims under business interruption policies as supply chains are impacted by the blockade of the Strait of Hormuz.
In mid-May reinsurance giant Munich Re said it was reserving €90m to meet anticipated claims, although CEO Andrew Buchanan said it was a very cautious figure at this stage: “It’s literally claims that we might end up paying if, for example, there are claims coming through the marine war markets or the political violence and terrorism market, that kind of thing.” He added that it was less than they paid out in the first year of the war in Ukraine.
The complex world of war risks cover, and the crucial role it plays in keeping commerce operating in war zones, surfaced very early in the conflict when President Trump announced on his Truth Social platform that the US government would put in place a back-stop reinsurance scheme to provide insurance cover to ship owners. The clear implication was that the mainstream insurance market might not be providing cover for ships seeking to travel through the Persian Gulf, including the Strait of Hormuz. This claim that lack of insurance cover was restricting shipping movements in the Gulf baffled the well-established war risks insurance market centred in London and Lloyd’s.
“Iran and the Persian Gulf is, of course, currently an area of maximum risk severity, but insurance is still available to operators in the area, including the Strait of Hormuz,” Chris Jones, CEO of the International Underwriting Association, a trade body representing non-Lloyd’s underwriters in the London market, said in a press statement issued shortly after Trump’s announcement in early March. The Lloyd’s Market Association was similarly emphatic: “Three weeks since the start of hostilities in the Middle East, we are still seeing reports that suggest insurance coverage is cancelled or unaffordable and that this is the reason that vessels are not transiting the Strait of Hormuz. This is not accurate.”
By the end of March, however, the US government, through its International Development Finance Corporation (DFC), had persuaded the leading US insurer Chubb to front a $20bn Maritime Reinsurance Plan “designed to resume commercial shipping in the Gulf.” DFC and Chubb said they had identified several other American insurance companies to provide reinsurance policies behind Chubb and alongside DFC to expand market capacity and were looking for additional reinsurance partners. Two months later none of the additional partners had been named.
The myth of an uninsured Gulf
The launch announcements focused on the role of the scheme in ensuring that trade through the Strait of Hormuz resumed, again suggesting that lack of affordable insurance might be part of the cause of the almost complete shutdown of shipping through the Strait. “DFC is pleased to partner with Chubb, one of the world’s leading insurance companies, to help get energy and trade flowing again through the Strait of Hormuz. DFC’s Maritime Reinsurance plan combines Chubb’s premier underwriting expertise with the financial commitment of the US Government. With this announcement, we are one step closer to restoring market confidence and resuming energy and commercial trade disrupted by the conflict with Iran,” said DFC CEO Ben Black.
Months later very little shipping was moving and lack of insurance was not the problem, as Andrew James, managing director, marine at London market broker Gallagher explained: “There has been a huge miscommunication. It has probably been misdirected by some people not inside the industry. Lloyd’s and the London market and other markets have always, always been open for war.
“The major change since any of the previous conflicts is that the captains and crew are far more aware of what is going on. Now the captain has the full command of the ship. If he doesn’t want to go through or his crew don’t want to go through, they just sit there and there is not much anyone can do about it.
“With the technology they now have available, they have all got very up-to-date information. So, when ships aren’t going through, it isn’t because there isn’t coverage available, it is because the captain and crew do not want to run the risk of going through.
“It was perceived that there wasn’t coverage available, which is why the US government put forward this facility, which is going to be led by Chubb and a number of other American insurers. It still isn’t actually up and running yet [in early May]. We are still trying to find out the details. But there is no real need for it. Coverage has always been available.”
Chubb failed to respond to requests for information on the current state of its scheme.
Lessons from the Black Sea
Meanwhile, in April, speciality Lloyd’s insurer Beazley announced a new consortium offering $1bn of capacity to complement the existing marine war risks cover available in the London Market. “This consortium demonstrates the agility of the market to respond to the needs of global supply chains,” said Beazley CEO Adrian Cox. In short, the traditional war-risks insurance market has risen to the challenge and is providing cover for ships and their cargoes.
This is not surprising because it is an experienced market, well versed in meeting the challenges of international conflicts. It has demonstrated its adaptability many times in recent decades. The war in Ukraine posed challenges to the marine insurance market but gave it a chance to show how a collaborative approach can produce innovative solutions.
For the outside world, the sharpest focus was on facilitating grain and fertiliser exports from Ukraine, especially since the collapse of the Black Sea Grain Corridor deal that was negotiated between the United Nations, Ukraine, Russia and Turkey. This only lasted a year until Russia pulled the plug on it in July 2023. Since then, Ukraine has created its own corridor from its main Black Sea ports – principally Odesa, Chornomorsk and Pivdennyi – that hugs the western coast of the Black Sea until it enters the relative security of Romanian territorial waters.
Precise figures are hard to come by but, coupled with the transport of grain and other foodstuffs by road to ports on the River Danube and by road through Poland, it is estimated that Ukrainian exports are up to around 90 percent of pre-war levels, providing a substantial boost to the Ukrainian economy and the world’s food resources. Insurance has been at the heart of ensuring the return to these levels.
There was a short period after the initial Russian invasion in February 2022 when so many ships were trapped, Ukrainian ports were being heavily shelled and bombed and the Black Sea was being mined by both sides that insurers backed away from
