Iran war lifts Gulf political-violence premiums at least 20-fold

War and political-violence insurance for events in the Gulf is close to disappearing, with only one insurer, and possibly two on very limited terms, still willing to consider the risk, according to insurance broker Marsh Middle East and Africa.

Marsh said political-violence premiums in the Gulf have risen at least 20-fold since the US-Iran war began in late February, while insurers' capacity to write the cover has shrunk from about $1 billion to about $200 million. Cover is offered case by case and generally no earlier than about one week before the event.

Standard event-cancellation policies exclude war and political violence, so organisers must buy that protection as a separate layer. With that layer disappearing, some choose to postpone or move events while others absorb the risk themselves, even as Yasmin Dacuycuy of broker Gallagher said pricing for standard cancellation cover had held broadly stable this year.

Saudi Arabia is the sharpest pressure point after Houthi missile and drone attacks on Riyadh, Abha and Dammam in October, which Marcos Alvarez of Morningstar DBRS said turned war from a theoretical exclusion into a live, priced peril. The Future Investment Initiative, the EU-Gulf summit, Intersec Saudi Arabia and the 2027 Dakar Rally have been cancelled, postponed or moved, while events that proceed are taking lower limits and more exclusions.

What do these terms mean?

Political-violence insurance: A separate cover that protects an event organiser against cancellation losses caused by war, unrest or attacks, because a standard cancellation policy excludes those risks.

Insurance capacity: The maximum risk insurers are able to cover. Its fall from $1 billion to $200 million means the market can no longer absorb large losses.

Insurance layer: Additional cover bought on top of the primary policy to protect against an excluded risk such as war, in return for an extra premium.