War-risk underwriters who spent the past two months cautiously repricing cover for the Strait of Hormuz woke on Monday to the news they had most feared: Iran and Israel are striking each other again, the April ceasefire is in tatters, and oil is heading back toward US$100 a barrel.
The immediate trigger was a defiant act of statecraft. Donald Trump telephoned Benjamin Netanyahu on Sunday, urged him not to retaliate against an Iranian missile barrage, and told several media outlets he was going to instruct the Israeli prime minister to stand down. "Each of them had their fun," Trump told Axios. "We don't need another one." Netanyahu struck Iran anyway - and by Monday morning, missiles were being tracked over Jerusalem, the Israeli Defence Forces (IDF) had mobilised reserves, and the Iran-backed Houthis had declared a full blockade of the Red Sea.
For the insurance market, this is not merely a geopolitical story. It is a pricing event.
Israel launched air strikes against what it described as "military targets of the Iranian terror regime" in western and central Iran - with explosions reported in Tehran, Tabriz and Isfahan - in retaliation for 11 Iranian missiles fired at northern Israel on Sunday, all of which were intercepted. Iran's Islamic Revolutionary Guard Corps (IRGC) responded with a second wave overnight, targeting Israeli air bases at Nevatim and Tel Nof, while declaring the attacks "the beginning of a full week of continuous strikes." Israeli Army Radio reported the IDF had assessed the campaign could last "several days," with a large-scale reserve mobilisation under way.
Israel also struck a petrochemical complex in Mahshahr in south-western Iran, which Iranian media said had been partially damaged. The Houthis in Yemen claimed a separate missile attack on Israel and announced a ban on all Israeli maritime navigation in the Red Sea.
The strikes mark the first time Iran and Israel have exchanged direct attacks since the April ceasefire - brokered by the US - came into effect exactly two months ago.
Brent crude climbed 4.5% to US$97.30 a barrel by Monday morning, with US-traded crude up 4.3% to around US$94.50, according to BBC News reporting on the day. That matters to insurers not just as an economic indicator but as a signal of what energy underwriters and marine war-risk specialists can expect from here.
The Strait of Hormuz - through which roughly one-fifth of the world's seaborne oil normally passes - had only partially recovered from the disruption caused by the initial phase of the conflict. When hostilities erupted in late February, war-risk premiums for vessels transiting the Strait surged from around 0.2% of hull value to as much as 1.0% within days, according to analysis from Howden Re, while the UK insurance market issued seven-day cancellation notices for vessels in Gulf waters. Traffic through the Strait fell by more than 80% against pre-conflict levels.
The April ceasefire had allowed a tentative reopening - but even then, caution prevailed. "The Strait may be officially open, but we are far from seeing normality restored," Calvin Gray, global head of marine at Intact Insurance, said at the time. "A temporary ceasefire may ease pressure, but until there is consistent, safe transit through the Strait, rates will continue to reflect a heightened risk environment."
That environment has now deteriorated sharply. With the ceasefire broken, underwriters face another round of repricing across marine, energy, political violence and - given Monday's airspace uncertainty - aviation lines. The Houthis' declared Red Sea blockade compounds the pressure: war-risk premiums in those waters, which surged roughly 20-fold in early 2024, had remained substantially elevated even before Monday's announcements.
The financial toll from earlier phases of the conflict gives a sense of what may follow. Munich Re reported approximately €90 million in Iran war-related claims; Everest Group recorded US$90 million in pre-tax catastrophe losses driven primarily by the conflict; Markel Group attributed US$35 million to Middle East hostilities; and Swiss Re set aside a US$400 million reserve for potential inflationary impacts - all figures disclosed in recent quarterly results, as reported by Insurance Business UK.
Aviation exposure adds another layer of complexity. Israel had already approved an US$8 billion state-backed insurance guarantee to support airlines operating in its airspace - extending cover to international carriers for the first time - in a sign of how far private market capacity had retreated. WTW's Airline Insurance Market Renewal Outlook for Q2 2026 had warned that "widespread rating increases should be expected," noting the squeeze on capacity across Middle East routes. That trajectory is now set to steepen further.
Perhaps the most pressing concern for risk managers is the one least visible in premium data. As analysis published in Insurance Business UK has highlighted, the majority of business interruption losses arising from conflict-related disruption fall outside standard policy coverage, which requires physical loss or damage as a trigger. Precautionary infrastructure shutdowns, rerouted voyages, delayed cargo and supply chain bottlenecks generate enormous financial exposure - most of it uninsured.
With the IRGC promising sustained strikes through the week and the IDF mobilising reserves for what could be a multi-day campaign, that uninsured exposure is growing again.
Monday's escalation also dealt a blow to the negotiations between Washington and Tehran that Trump had been pressing as his principal legacy play in the region. The US president had told the Financial Times that Netanyahu would have "no choice" but to accept whatever deal the US secured, insisting: "I call all the shots." That claim now looks strained.
An Iranian official involved in the talks told one outlet on Monday that "a deal with President Trump is no longer feasible at this stage." Qatar's prime minister was in contact with Iran's foreign minister seeking to contain the crisis through diplomacy, but no de-escalation had been announced by mid-morning.
Canada's foreign minister called for "maximum restraint." The EU's top diplomat urged both sides back to the negotiating table. Whether either party is listening is another matter.
For the insurance market, the only certainty is that the repricing cycle - barely paused since February - has started again.
