Insurers are bracing for heightened volatility in the Middle East following the abrupt redeployment of the USS Nimitz aircraft carrier away from the South China Sea and towards the Gulf region, amid escalating hostilities between Israel and Iran.
The vessel had been slated to dock in Vietnam this week, but its scheduled visit was cancelled due to what American diplomats described as “emergent operational requirements”. While no official confirmation has been issued regarding its precise destination, defence analysts widely interpret the shift as a strategic repositioning in anticipation of further conflict in the Gulf.
The move comes as military activity intensifies in and around the Strait of Hormuz, a narrow maritime corridor responsible for nearly 20% of the world’s oil supply and a growing proportion of liquefied natural gas shipments. Iranian lawmakers have publicly hinted at the potential closure of the strait, while regional surveillance data confirms a rise in electronic interference disrupting commercial vessel tracking.
For the insurance sector, the convergence of military escalation, electronic interference, and disrupted maritime logistics represents a sharp rise in regional exposure. Hull, cargo, and war risk underwriters are reassessing policies issued to clients operating in Gulf waters, while some reinsurers have initiated internal exposure audits focused on the Arabian Sea, Gulf of Oman, and Persian Gulf.
“We’re investigating the impact that recent escalations between Israel and Iran will have on both the availability and cost of war risk insurance within the Middle East,” Dylan Saunders-Mortimer, marine hull UK war leader at Marsh told Insurance Business. “While there is not yet a general consensus, we note several key themes emerging, including: Consideration for increasing rating generally across Middle Eastern ‘High-Risk-Areas’ as defined by the JWC Listed Areas, due to expansive nature of the threat and various proxies involved; consideration for the reduction in notice periods to enable Underwriters to amend terms in order to accommodate the dynamic and rapidly evolving nature of the risk; speculation around maritime chokepoints more likely in the Red Sea / Gulf of Aden / Indian Ocean (RS/GOA/IO) rather than Hormuz; and the potential for Persian Gulf / Arabian Gulf (PG/AG) to be treated in a similar fashion to RS/GOA/IO with US / UK & Israeli nexus considered to be higher risk.”
Aviation markets, still recovering from the COVID-19 downturn and recent Houthi-related interruptions in the Red Sea, are again under stress. European air traffic controllers report significant rerouting, with dozens of flights avoiding Middle Eastern airspace altogether. Claims related to war risk covers, flight diversions, and business interruption are expected to rise.
Footage captured from a passenger plane over Dubai shows Iran’s ballistic missiles being launched toward Israel. pic.twitter.com/rwNOz9Of4Q
— NOELREPORTS 🇪🇺 🇺🇦 (@NOELreports) June 16, 2025
At the heart of insurers’ concerns is the vulnerability of energy infrastructure. Israeli strikes over the weekend reportedly crippled oil storage and refining sites near Tehran, including the Shahran and Shahr Rey facilities, integral to both domestic supply and international exports. The resulting fires drew comparisons to earlier Gulf conflicts that disrupted regional energy flows for months.
Brent crude saw an initial spike before easing slightly on Monday, but energy analysts warn that any interruption to shipping through the strait would likely drive oil prices well beyond $100 per barrel, with significant ramifications for energy and transport policyholders worldwide.
Despite the tensions, commercial shipping in the Strait of Hormuz remains active, albeit under strict advisories. British maritime security firm Ambrey has urged clients to conduct detailed transit risk assessments, particularly for vessels with affiliations to Israeli entities. Industry sources confirm that some operators are already exploring alternate routes via the Cape of Good Hope to avoid both the Red Sea and Gulf waters - a diversion that drastically increases voyage time and costs.
“While Iran’s initial response targets Israel directly through deployment of one-way attack drones, the concern remains that Iran might weaponize their ability disrupt commercial shipping through the PG / AG, Strait of Hormuz and the GOA,” agreed Saunders-Mortimer.
“As seen historically, the Iranian Revolutionary Guard Corps (IRGC) are not afraid to ‘flex their muscles’ during periods of heightened tension; notable incidents include the seizure of MSC Aries in April 2024, limpet mine attacks in 2019 and GPS interference in May 2025.”
And it’s not just Israeli-linked shipping that is at risk, according to the Marsh’s UK Marine hull war leader. “If similar tactics are deployed, it is likely that they will be directed at owners / operators with US / UK & Israeli nexus, but there remains the possibility of a more generalised threat and potential for targeting to be expanded to shipping in general to display regional, maritime control and apply diplomatic pressure.”
The United Kingdom Maritime Trade Operations (UKMTO) issued warnings earlier today regarding persistent GPS interference across the Gulf, advising captains to exercise enhanced caution and report anomalies.
Hapag-Lloyd, one of the largest global container lines, stated it continues to use the Strait for now, though the company conceded the situation remains fluid. The Red Sea, however, remains off-limits following attacks on merchant vessels earlier this year.
Equities with strong ties to global trade and aviation, including IAG and Emirates Group, fell modestly on Monday as markets absorbed the shifting risk landscape. Meanwhile, major reinsurers in Zurich and London are reportedly tightening policy language and applying stricter conditions on war-related extensions.
For the global insurance industry, the Middle East crisis underscores the persistent volatility of geopolitical risks and the urgency of robust modelling for scenario-based exposures. With military operations expected to continue for at least another week, and US naval assets now repositioning, the sector faces a renewed test of its agility and preparedness.
