Insurance Curator Underwriters tighten cover for high‑risk routes amid Middle East escalation, triggering short‑term premium hikes
Who: London Market and specialty underwriters, global marine and aviation insurers, and major travel‑insurance providers. What: Underwriters have tightened war‑risk and related cover for vessels and aircraft transiting parts of the Middle East while travel and event insurance purchases spike as consumers and organisers seek protection against geopolitics and extreme weather. When: developments accelerated through 2024–2025 and remain active into early 2026. Where: shipping lanes and airspace around the Red Sea, Gulf of Aden, Strait of Hormuz and parts of the eastern Mediterranean, and in markets across North America, Europe and Asia where travel and event policies are sold. Why: renewed attacks on merchant shipping, broader Iran‑Israel regional tensions and rising climate‑driven disruption have conjoined to raise short‑term risk perceptions, prompt restrictive underwriting actions, and push premiums higher. (spglobal.com)
Underwriters in the London and international specialty markets have over the past 18 months moved from repricing to restricting cover as hostilities and maritime attacks in the Middle East produced hard, immediate exposures that are difficult to model or reinsure. Marine and aviation war‑risk insurers have imposed higher breach premiums, shortened the periods for which extra cover is sold, added stricter warranties and in some cases simply withdrawn capacity for particular flags or voyages — actions that have translated into double‑digit short‑term premium increases for some transits. Industry analysts say the tightening has been most visible for voyages through the Red Sea and adjacent waters and for operations that involve Israel and its allies. (spglobal.com)
“Some vessels may find they cannot get cover at all to cross the Red Sea,” David Smith, head of hull and marine liabilities at broker McGill & Partners, told S&P Global Market Intelligence as underwriters increasingly differentiate by flag, prior port calls and ownership. “That’s quite a new warranty that’s certainly being imposed.” The market is also shortening the typical seven‑day war‑risk covers to much shorter windows, sometimes 24 hours, leaving shipowners more frequently buying spot cover at volatile rates. (spglobal.com)
Spike in premiums and a costly real‑world example
Market prices rose sharply when attacks resumed and intensified. After a series of attacks in mid‑2025, quotes for extra war‑risk insurance for Red Sea transits climbed to levels that were several times higher than a year earlier; brokers and underwriters reported quotes ranging from a few tenths of a percent of a vessel’s value to peaks of around 1% for a seven‑day cover, depending on vessel type, flag and ownership — enough to add hundreds of thousands of dollars to the cost of a single voyage for large vessels. For the Strait of Hormuz, Marsh McLennan reported increases of roughly 60% in some hull and machinery pricing in mid‑2025 as insurers re‑rated Gulf exposure. (investing.com)
The human and balance‑sheet consequences of the exposures have been stark. In July 2025, two bulk carriers were struck in the Red Sea; one, the Liberian‑flagged Eternity C, sank following an attack. The owner’s war‑risk arrangements did not include the additional Red Sea war‑risk addendum required by some underwriters for that route, leaving the vessel effectively uninsured for the peril that struck it. Market sources estimated the uninsured loss at tens of millions of dollars and warned that similar losses would prompt further underwriting caution. (ft.com)
Why underwriters are retrenching
Underwriters say the combination of deliberate targeting of commercial shipping by non‑state actors — notably Houthi attacks in the Red Sea — and the expanding geographic footprint of potential hostilities has made modelling tail risk problematic. The return on higher short‑term premiums is offset by concentration risk: a single major incident can produce large, correlated losses across hull, cargo, liability and business‑interruption lines. The credit‑rating agency Morningstar DBRS warned that a prolonged Iran‑Israel conflict or broader escalation would constrict reinsurance capacity and raise capital charges for primary insurers, especially in specialty marine and aviation lines. (insurancejournal.com)
“Higher premiums in marine and aviation may offer some short‑term underwriting relief, but the accumulation of risk exposures across war, cyber, travel and political risk lines presents meaningful capital pressure for many insurers,” Morningstar DBRS concluded in a mid‑2025 briefing. Reinsurers, which provide back‑stop capacity to primary carriers, can be even more conservative: when reinsurance terms harden, primary underwriters must tighten their own appetite and apply stricter wordings or higher attachment points. (insurancejournal.com)
Travel and event insurance demand surges as consumers seek protection
Against the same geopolitical backdrop, consumer behaviour has shifted: demand for travel insurance and contingency/ticket‑refund coverage has risen markedly in several major markets. Travel insurers and aggregators report higher purchase rates around major booking moments and elevated interest in products that cover trip cancellation, medical evacuation and disruption linked to extreme weather and political unrest. Allianz Partners — one of the largest global travel‑assistance and insurance groups — said its booking‑partner data showed a surge in trip plans for seasonal peaks and growing conversion to insurance at booking; its analysis of more than 1.6 million itineraries around the February 2026 Valentine’s travel period showed a near‑term uplift in bookings and signalled continued appetite for cover. (hotel-online.com)
Insurers and brokers point to a fusion of drivers: lingering pandemic‑era risk awareness, higher frequency of extreme weather events and immediate fear of disruption from targeted violence or military escalation. Cover‑More, a major travel‑insurance provider, told Insurance Business that overseas medical costs and larger average claim sizes — which the firm said have risen roughly 50% since 2019 — have been a major factor prompting tighter underwriting and product repricing. Cover‑More said medical claims account for an unusually large share of claim costs, pressuring premiums and product design. (insurancebusinessmag.com)
Event and contingency insurance has also seen rising demand from organisers mindful of climate‑linked cancellations and geopolitical uncertainty. Brokers and market reports indicate that corporate conferences, festivals and sporting events are increasingly buying contingency—non‑appearance and cancellation covers—often alongside security and evacuation services. Global brokers such as Aon and Marsh report higher queries and bespoke placement requests for complex multi‑jurisdictional events, while specialist event insurers and MGAs are expanding capacity and product menus to meet the need. Market research firms forecast mid‑single‑digit to double‑digit growth in the event‑cancellation market in the coming years. (aon.com)
“Organisers are now pricing in the risk of extreme weather or sudden travel bans as a routine part of event budgets,” a senior underwriter at a London syndicate told market reporters. That risk awareness is feeding demand for more tailored contingency covers — and for clearer, often narrower wordings from underwriters who are reacting to the same unmodelled accumulation concerns that afflict marine war insurers. (insuranceinsider.com)
Spread of underwriting actions and market mechanics
Underwriters are not acting uniformly. Syndicates in the Lloyd’s market and London‑based hull war specialists have been among the quickest to re‑price and impose warranties. Some underwriters now apply “recent port call” warranties — for example excluding cover for ships that have called in certain Israeli ports within a defined look‑back period — or they demand detailed voyage notifications and charge higher breach premiums for passage through listed areas. Aviation war‑risk underwriters have likewise tightened exposures for flights into and out of hot‑spot airports by increasing premiums for ground and hull war risk, and by adding explicit airspace or landing‑period exclusions tied to government travel advisories. (spglobal.com)
Where vessels cannot secure commercially acceptable war‑risk cover, owners are opting to reroute: the longer voyage around the Cape of Good Hope rather than through Suez and the Red Sea has become an expensive but lower‑risk alternative. That detour adds days at sea, extra fuel costs and scheduling complexity that ripple through supply chains; shipping associations have pointed to container and tanker flows being materially altered since the first Houthi attacks in late 2023. Analysts warn that those logistics changes, combined with higher insurance levies, feed inflation into commodity and finished‑goods prices. (spglobal.com)
Short‑term premium hikes, long‑term questions about capacity
Short‑term market reaction has been pronounced: war‑risk add‑on premiums for specific transits — the most visible immediate product change — have jumped, sometimes doubling or more in spot quotations when incidents or threats spike. But market participants caution that higher prices are only a partial and temporary fix. If a catastrophic, correlated loss were to occur, the resulting claims could overwhelm pockets of specialized capacity and test reinsurance arrangements. The Morningstar DBRS analysis warned that reinsurance contraction in a prolonged conflict would place further pressure on primary carriers, forcing them to carry more retention or leave risks unplaced. (insurancejournal.com)
At the same time, first‑world insurers selling travel and event cover face their own inflationary and claims pressures. Insurers such as Cover‑More and Allianz report larger average medical claim sizes and rising costs for overseas treatment and evacuation, and they are adjusting pricing and policy limits accordingly. Some providers have broadened parametric offerings or added “cancellation plus” style extensions to address non‑traditional reasons for trip disruptions, while others have tightened foreseeability rules and exclusions tied to declared travel advisories. (insurancebusinessmag.com)
“Medical claims constitute a substantial portion of total claims cost — 40% to 50% in some portfolios — and the average claim size has surged roughly 50% since 2019,” Cover‑More executives told Insurance Business, noting cost‑containment and pricing actions to keep products viable. (insurancebusinessmag.com)
Regulatory and buyer‑behaviour dynamics
Regulators and institutional buyers have been watching underwriting shifts closely. For corporates with duty‑of‑care obligations, enhanced policy wording and access to 24/7 assistance remain priorities. Some large employers and travel‑risk managers are buying bespoke programmes that blend travel insurance, crisis response and kidnap‑and‑ransom/evacuation capabilities from brokers and specialist insurers. Governments and shipping associations have urged caution for crews and operators, and flag states have at times issued guidance discouraging voyages through high‑risk zones. (premium.insurancebusinessmag.com)
Retail buyers are more price‑sensitive but increasingly expect easier purchase paths and clearer coverage. Insurers have responded with more integrated buying experiences — Allianz Partners and Cover‑More both report growing volumes sold through airline and travel‑partner checkout flows — and with clearer travel‑alert pages that set “foreseeability” dates for weather events and political unrest. Those foreseeability rules determine whether a loss is covered when an event that would prompt a claim was already publicly foreseeable at the time the policy was bought. (hotel-online.com)
Industry responses and product innovation
The market is already evolving to meet demand while protecting capital. Underwriters are tightening wordings on traditional policies but at the same time insurers and MGAs are experimenting with new products: parametric covers for weather‑related disruption, modular contagion‑style clauses that limit exposures, and bundled assistance products combining medical evacuation, security advice and cancellation cover for corporate travellers. Reinsurers are selectively deploying capacity to specialty lines where they can price accumulation risk with greater confidence. Brokers are also advising clients on route planning and loss‑mitigation tools such as naval escorts or adherence to convoy guidance — measures that sometimes reduce premium requirements. (aon.com)
Outlook: near‑term volatility, long‑term recalibration
Market participants interviewed by reporters and analysts say the near‑term outlook is for persistent volatility. Premiums are likely to remain elevated while incidents and regional tensions continue; underwriters will continue to press for stricter voyage notifications and exclusions to limit accumulation; and travel and event insurers will recalibrate pricing and product design in response to higher medical costs and a growing catalogue of climate and geopolitical perils. The broader insurance market faces a balancing act between serving client needs and maintaining capital resilience if a large, correlated loss event occurs. (spglobal.com)
“While higher pricing in some lines can improve short‑term profitability, the market cannot ignore the potential for accumulation losses that would strain capital,” the Morningstar DBRS report warned. For shipping, the human and economic costs of decisions by owners to transit or reroute — and underwriters to cover or not — are immediate. For travellers and event organisers, the lesson has been the same: demand for protection is rising as disruptions become a routine part of the risk landscape. (insurancejournal.com)
Methodology and sources
This article draws on interviews and reporting by market intelligence and news organisations, broker and insurer public statements and industry reports, including S&P Global Market Intelligence on marine and aviation war coverage, Reuters reporting on Red Sea insurance pricing and attacks, Financial Times coverage of hull and machinery price moves and uninsured losses, Allianz Partners’ booking and travel‑index data, Cover‑More public commentary on claims inflation, and a Morningstar DBRS assessment of insurer and reinsurer exposures. Specific sources include S&P Global Market Intelligence, Reuters, Financial Times, Allianz Partners, Cover‑More/Insurance Business and Insurance Journal/Morningstar DBRS. (spglobal.com)
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