For United States property and

casualty insurers, this isn’t simply a foreign policy story

Automotive manufacturers are dependent on Middle Eastern petrochemicals.

Agricultural operations are dependent on fertilizer imports. … When …

supply chains stall, businesses can be impacted to the point of having to shut down.

By Michael Wayne

As seasoned insurance veterans know, the industry rarely remains on the sidelines in the wake of geopolitical shock, and the bombing campaign against Iran and the resulting regional escalation has already sent signals through energy markets, shipping lanes, and global trade routes.

For U.S. property and casualty insurers, this isn’t simply a foreign policy story. This is a developing underwriting story; a story that could shape pricing, exposures, and coverage discussions for the remainder of 2026 and beyond. Here are the Top 5 ways this conflict could influence the P&C insurance landscape.

Oil and commodity volatility will drive claims inflation. The price of oil is a single, immediate economic indicator of Middle East conflict. Following the strikes on Iran and disruptions in the Persian Gulf, crude prices surged rapidly. Prices have topped $100 per barrel and could possibly climb toward $150 if shipping through the Strait of Hormuz remains disrupted.

That matters for insurance in more ways than you might think. Higher oil prices will drive up construction material costs, transportation and logistics costs, and equipment and machinery replacement costs. That translates into higher claim severity. Every burned building, damaged fleet vehicle, or industrial equipment claim will be more expensive to repair or replace.

For auto insurers, the effect is equally real. Parts manufacturing, shipping, and labor costs are tied closely to energy inputs. The industry learned during the inflation spike of 2021–2023 that supply shocks can push repair costs up faster than premium adjustments.

Producers should expect more underwriting scrutiny on replacement cost estimates and tighter valuation discussions at renewal.

Marine, energy and war-risk insurance will harden quickly. Roughly 20% of the world’s oil supply moves through the Strait of Hormuz. It is one of the planet’s most strategically sensitive shipping corridors. Shipping insurers continue reacting to the conflict. War-risk premiums for vessels passing through the strait have risen sharply, and energy and marine insurers are bracing for significant exposure.

In short, tanker insurance rates are increasing, cargo insurance costs are on the rise, and coverage exclusions are expanding. Ultimately, these market shifts work their way into U.S. insurance markets. Domestic carriers writing inland marine, cargo, logistics, and manufacturing exposures will face higher upstream costs and potentially tighter reinsurance terms.

Producers working with manufacturers, energy firms, and importers should prepare clients for sudden mid-year market adjustments.

Supply chain disruption will revive business interruption risk. War doesn’t need to happen on American soil to affect American insurance claims. The conflict has already disrupted air cargo routes and maritime traffic across the Persian Gulf, creating bottlenecks for global trade and raising freight costs. For businesses that depend on global supply chains, this creates a classic contingent business interruption (CBI) exposure.

Automotive manufacturers are dependent on Middle Eastern petrochemicals. Agricultural operations are dependent on fertilizer imports. Technology companies are reliant on specialty metals or microchips shipped through Asian-European routes. When those supply chains stall, businesses can be impacted to the point of having to shut down.

Many policyholders discovered during the COVID pandemic that CBI coverage is narrow and highly conditional. Producers should expect renewed interest in supply-chain resilience coverage, parametric triggers, and broader business interruption endorsements.

Political violence coverage will expand beyond the Middle East. When war spreads, or threatens to, political violence insurance demand tends to rise globally. Already, companies across the Persian Gulf region are rushing to buy coverage for terrorism, war, missile strikes, and civil unrest as the conflict escalates. Premiums in some cases have increased fivefold compared with previous pricing. That trend will likely migrate into Western insurance markets.

Multinational companies headquartered in the United States often maintain assets abroad, such as energy facilities, logistics hubs, data centers, and manufacturing plants. Those operations suddenly look riskier. For U.S. brokers, this may lead to a surge in requests for political violence or terrorism insurance, kidnap and ransom policies, and war-risk endorsements for overseas operations. Producers can expect underwriters to evaluate geopolitical exposure much more aggressively in multinational placements.

The regime-change question could shape long-term insurance risk. Perhaps the most unpredictable variable in this conflict is what comes next. The resulting power vacuum in Iran could spark an attempted regime change. Several scenarios are possible:

• Continuation of the current regime under new leadership
• Fragmentation of the state into competing power centers

• A nationalist or military government replacing the clerical leadership

For insurers, the distinction matters. A stable successor government could ultimately reduce regional tensions and restore energy stability, which would bring commodity prices down and normalize insurance markets.

A fractured state or prolonged conflict, however, could turn Iran into a long-term geopolitical flashpoint like Iraq in the early 2000s. That kind of instability would keep oil prices volatile, shipping routes vulnerable, and political violence risk elevated. For property and casualty insurers, that means geopolitical risk could become a permanent underwriting factor, not just a temporary shock.

The business of insurance has always been about anticipating risk before it becomes a loss. Global conflicts like the bombing of Iran test that discipline. For producers and brokers, the takeaway is straightforward: Geopolitical events that seem distant geographically often arrive quickly in underwriting conversations. This event has only just begun, and there is no knowing what the lasting tensions could be once the major combat is over.

The author

Michael Wayne is a freelance writer who focuses on insurance and risk management issues.