3. Political Risk and Business Interruption Claims
American companies operating abroad — especially in the Middle East — rely on political risk insurance and business interruption policies.
If facilities close, contracts halt, or supply chains collapse, insurers may face a wave of claims.
How those claims are handled could shape the industry’s reputation for years.
Lloyd’s of London and the Global Risk Market
Historically, global conflict forces innovation in insurance.
World War I led to expanded marine underwriting frameworks.
World War II reshaped aviation insurance.
Post-9/11 terrorism exclusions changed commercial policy structures.
If the Iran conflict escalates into a regional war, we could see:
- New standardized war exclusions.
- Separate pricing tiers for geopolitical risk.
- Expanded use of parametric insurance.
- Government-backed insurance pools for war-related risks.
Markets adapt.
But adaptation often comes at a cost.
Could Government Backstops Return?
After 9/11, the U.S. enacted the Terrorism Risk Insurance Act (TRIA) to stabilize markets when insurers pulled back from terrorism coverage.
If war-related losses grow severe or systemic, policymakers may face pressure to create new federal backstops — particularly for cyberwarfare or infrastructure sabotage.
That conversation has already been brewing.
This conflict could accelerate it.
