Reinsurers faced a volatile political violence and terrorism (PV&T) market at the 1 July renewal as a wave of strikes linked to Iran's Revolutionary Guard Corps (IRGC) reshaped underwriting appetite across the Middle East.
The trend is detailed in new analysis from reinsurance broker Howden Re. The broker said wider shifts in global risk, such as civil unrest in the Americas, have added to the pressure on the market.
Most reinsurers in the region took a "pens down" approach to new enquiries immediately after the escalation. Appetite has since reopened unevenly, with some markets now reviewing only firm orders.
Some reinsurers are receiving more than 50 submissions a day. Many are declining risks tied to Western interests and critical infrastructure such as airports, refineries, desalination plants, and ports.
Strike target lists continue to change on a near-daily basis. Acceptable occupancies remain difficult to define as a result. Capacity is being deployed in smaller line sizes, and single-location risks are achieving more success than large multi-location programmes.
Wajih Tabbara, head of property, construction and political violence at Howden Re Dubai, said underwriting decisions are made against a target list that "can change within 24 hours." He said clients in high-exposure territories need clean risk data and a clear narrative around exposure management to secure cover.
Other brokers have reported a similar shift. WTW said the conflict has become a defining factor in the terrorism and political violence segment. It also described the market as settling into reduced line sizes, tighter terms, and higher rates.
Early estimates suggest insured losses from the recent strikes could exceed US$3 billion, with total economic and uninsured losses expected to be materially higher. The gap between insured and uninsured losses is expected to stay wide, as PV&T coverage remains limited or excluded across many affected regions.
Marsh and Morningstar flagged a related accumulation risk concern. Marsh put standalone terrorism capacity at US$1 billion to US$4 billion per risk, against US$1.2 trillion of total US sector capital. Morningstar said the industry can absorb moderate losses but warned prolonged tension could tighten terms further.
Reinsurers are also monitoring potential business interruption and supply chain disruption across energy, logistics, and transport sectors. Concerns remain over further escalation and the spread of exposures across the region.
Rates are rising alongside tighter underwriting controls, reduced line sizes, and higher attachment points, particularly for standalone political violence placements. Risks in high-exposure territories face continued difficulty securing broad coverage.
New capacity is entering the market from recently established MGAs and syndicates setting up PV&T as a line of business. Markets with established regional expertise continue to deploy capacity selectively on risks with strong risk management standards.
The capacity squeeze has prompted a market response. The Fidelis Partnership launched a political violence consortium in June with capacity of up to US$47.5 million per risk in the Middle East. The 2026 Allianz Risk Barometer found war overtook civil unrest as the top political violence fear, cited by 53% of respondents.
Global premium income for the class is estimated at around US$1.5 billion, against insured loss estimates already approaching double that figure. Smaller, dispersed incidents such as civil unrest and assailant events have also been recorded across the Americas, Europe, and Africa.
Olivia Pullen, director of terrorism and political violence at Howden Re London, said smaller events are becoming increasingly material to overall class performance. "There aren't many territories now genuinely considered risk-free from a PV&T and extended perils perspective," she said.
The PV&T tightening stands apart from the broader July 1 renewal. Gallagher Re said property catastrophe rates fell broadly at mid-year, with reinsurer return on equity projected at 14% to 15% for 2026.
Regional treaty aggregates are expected to come under increasing stress if the Middle East escalation continues. A sustained rise could prompt retrocession markets to take a more cautious approach to capacity deployment and accumulation management.
