The global insurance industry is on alert on after breaking news that President Donald Trump has approved attack plans and is edging closer to authorising US military involvement in the escalating conflict between Israel and Iran - a move that could further destabilise international trade routes and drive up underwriting costs across several classes of cover.
According to multiple sources cited in US media, the president has given preliminary assent to a military plan targeting Iranian nuclear infrastructure but has delayed execution to observe whether Tehran shows any inclination to reverse its uranium enrichment programme. “I may do it, I may not do it,” Trump told reporters on, repeating demands for an unconditional Iranian retreat from its nuclear ambitions. He also said he wanted to make the decision “ one second before it’s due” .
The Pentagon has reinforced its regional presence in recent days, positioning additional naval assets in the eastern Mediterranean and Arabian Sea, bolstering US capacity for rapid engagement should the order come. Analysts suggest this posturing is not merely defensive but may be designed to apply pressure on Iranian decision-making.
While no strikes have yet been authorised, insurers across marine, political risk, energy, and aviation markets are already recalibrating exposure assumptions, particularly in light of the growing sophistication of Iranian missile systems and their deployment against Israeli targets. Casualty figures in Iran have now exceeded 600, while 24 Israeli civilians have been reported dead following retaliatory fire.
The London insurance market's Joint War Committee (JWC) met on Wednesday to review implications for global shipping, particularly in relation to the Strait of Hormuz and eastern Mediterranean lanes. Though no changes were made to existing risk advisories, brokers noted that war risk premiums for ships transiting the Gulf are rising steeply — in some cases by over 60% compared to last month.
Rates for seven-day cover on vessels calling at Israeli ports are reported to have climbed to as much as 1% of hull value, reflecting increased concern over potential collateral damage and asymmetric threats, including cyberattacks and GPS interference.
Insurers are now reassessing aggregate exposures, particularly where marine, energy and political violence policies may overlap. Facultative reinsurers have been especially vigilant, with some signalling reluctance to expand Gulf-related capacity ahead of mid-year treaty renewals.
“What is particularly challenging right now is some of the jamming that’s happening,” Wael Sawan, CEO of Shell told Bloomberg, referring to the fact that electronic AIS signal interference is already happening around the vital chokepoint of the Strait of Hormuz.
The broader geopolitical ramifications are also being monitored by reinsurers in Europe and Asia. The possibility of a formal US entry into the Iran-Israel conflict raises questions about the availability of capacity for war and terrorism covers across the wider MENA region, especially if energy infrastructure or LNG terminals come under fire.
Although the Strait of Hormuz remains open, intelligence sources suggest the Iranian navy has stepped up activity near key chokepoints, heightening fears of miscalculation. A recent non-hostile collision involving two tankers near Khor Fakkan - one of which reported unusual navigation signals - has amplified concerns about cyber vulnerabilities in commercial fleets.
In parallel, some aviation insurers are reviewing their exposures on routes traversing Middle Eastern airspace. While not yet officially reclassified as “avoid zones,” insurers are requesting detailed flight plans and may apply war risk surcharges should the situation escalate.
Political violence underwriters are also on alert. Any US-led military campaign would likely heighten the threat environment in Tehran and other Iranian cities, where mass evacuations and unrest have already begun. The US embassy in Israel has activated emergency evacuation protocols for American citizens, with suggestions that similar plans are being drawn up for nationals elsewhere in the region.
Though no direct hits have been recorded on maritime commerce so far, the insurance market is proceeding on the basis that escalation is not only possible, but increasingly probable.
For insurers, the next week may prove pivotal. Should Trump approve active engagement, it would mark the first formal entry of US forces into hostilities involving Iran since the 1980s - a move that could reshape risk pricing across a swathe of global sectors.
