Premiums surge 5 times in a week! Middle Eastern companies rush to buy "Political Violence Insurance"

The situation in the Middle East is rapidly escalating, with companies in the Gulf region flooding the political violence insurance market on a large scale. Related premiums have skyrocketed to five times their previous levels in less than a week, and the market’s systematic re-pricing of regional risks has already begun.

According to reports, as conflicts in Iran intensify, insurance companies and brokers have recently received hundreds of inquiries from asset owners seeking coverage for infrastructure and commercial real estate against war-related threats. Investors and businesses in Gulf countries such as Saudi Arabia and Oman are increasingly worried about violence spilling over into neighboring economies.

The surge in premiums is directly reflected in the quoted numbers. Before the escalation, political violence insurance rates for energy projects in Saudi Arabia or the UAE were typically below 1% of the insured value; recently, the rate has risen to about 5%. For example, a $20 million project with $10 million coverage now costs nearly $500,000, up from less than $100,000.

This round of shocks has also affected digital infrastructure. Security experts say drones attacked data centers operated by Amazon in the UAE and Bahrain this week, with suspicions of Iranian involvement; Microsoft stated that its regional operations were unaffected.

Inquiries surge: multiple industries rush to insure

The recent demand surge covers multiple sectors. Reports indicate that many fields, including renewable energy and hospitality, are submitting numerous insurance applications—solar projects in Saudi Arabia and hotels in Bahrain and Qatar have sought coverage. Companies are worried not only about direct attacks but also about indirect damage from intercepted missile shrapnel.

Insurance broker Bowring Marsh’s head of war and terrorism business, Raj Rana, revealed that just since last weekend, the company has received over 50 inquiries for political violence insurance. Brokers note that a significant portion of this new demand comes from Western companies operating in the Gulf region—insurers believe these companies face higher attack risks.

Previously, many regional companies held terrorism insurance. However, brokers say that given the current situation, terrorism coverage alone is insufficient, and they recommend companies switch to broader political violence insurance—which also covers riots, strikes, and civil unrest.

Political violence insurance typically covers property damage caused by terrorist attacks, missile fragments, civil unrest, strikes, and riots. Before this escalation, such policies were priced very low in the Gulf, usually below 1% of the insured value.

Fergus Critchley, head of global terrorism and political violence at WTW, warned that the losses from this crisis could be “far greater and more catastrophic than anything seen in recent years.”

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