The U.S.–Israel war with Iran is destabilizing much of the surrounding Middle East, with businesses such as hotels, data centers, and pipelines facing heightened risk of damage. Rising geopolitical tensions are set to drive a rapid increase in demand for political risk insurance, according to GlobalData.
“Political risk insurance is important to businesses near potentially dangerous zones, as most insurance policies have war exclusions. This means that if a hotel, for example, is damaged by any kind of military strike, a traditional commercial property or business interruption policy may not pay out. There may also be legal grounds to dispute the terms of that particular contract. The risk of damage caused by intercepted missiles or accidental strikes is extremely high in areas such as the UAE and Qatar at present,” says Ben Carey-Evans, senior insurance analyst at GlobalData.
Key takeaways:
· Geopolitical tensions have seen demand for cyber insurance grow sharply since the start of the Russia-Ukraine war, but GlobalData’s poll data suggests demand for political risk insurance is rising almost as quickly.
· A GlobalData poll found that insurance insiders believed cyber insurance would see the highest demand due to geopolitical tensions, but one in four respondents believed that political risk insurance would see the highest demand. Supply chain insurance is also likely to be popular now with heavy restrictions in major shipping routes.
“It is clear that insurers looking to sell political risk insurance (or cyber, or supply chain insurance) will see a huge spike in business throughout 2026. However, they will be taking on significant risk in doing so, so pricing the product and understanding the level of risk they are exposing themselves will be critical,” says Carey-Evans.
