Quick Update From Moody’s on Latest Marine and Aviation Risks in Gulf Region

Some thoughts from Moody’s here;

The conflict in the Middle East is amplifying tail risks for global specialty insurers, particularly across marine, aviation and political violence lines, according to a new report from Moody’s Ratings.

Key findings:

• We expect losses to remain contained for large, diversified insurers under our baseline scenario.
• Specialty insurers are facing a higher likelihood of severe but low-frequency claims as missile and drone attacks disrupt key transport corridors in the Gulf region, including the Strait of Hormuz.
• Marine and aviation traffic has been reduced, prompting insurers to reprice or restrict cover, while demand – and pricing – for political violence and terrorism (PVT) insurance has risen sharply.
• We expect large insurers and reinsurers to absorb losses thanks to disciplined risk selection, aggregate exposure limits and reinsurance protection. War exclusions also provide some insulation, though these are likely to face legal challenges in certain cases.
• The duration of the conflict remains a key risk factor, with prolonged hostilities increasing the probability of more complex and aggregated loss scenarios.
• Marine insurance faces elevated tail risk as vessels become exposed to damage, detention and potential “blocking and trapping” claims if transit through the Strait of Hormuz remains disrupted.
• Aviation insurers also face heightened exposure, particularly to aircraft on the ground at major regional airports, though we note that insurers retain the ability to reprice risk quickly if conditions deteriorate.
• There is growing legal uncertainty around PVT and strikes, riots and civil commotion (SRCC) cover, where distinctions between war, terrorism and civil unrest are often contested. Rising demand for this cover supports insurer revenues but also increases exposure if the conflict escalates further.
• Other specialty lines – including cyber, event cancellation and energy insurance – face lower but non-negligible risks, particularly in the event of prolonged disruption or spillover effects across multiple asset classes.

Key takeaway: While the conflict in the Middle East is increasing geopolitical and specialty insurance risks, we expect that losses are likely to be manageable for well-diversified insurers unless hostilities become more prolonged or escalate significantly.