Political risk insurance gains as 1 in 4 expect growth

Insurers may face tougher pricing decisions as geopolitical uncertainty persists.

The political risk insurance market will see a sharp increase in demand amidst rising tensions involving the US, Israel and Iran are increasing risks across the Middle East, according to GlobalData.

The conflict is affecting key sectors including hospitality, energy and infrastructure, with assets such as hotels, data centres and pipelines seen as vulnerable to missile strikes and drone incidents. 

Whilst geopolitical tensions have already boosted demand for cyber insurance since the start of the Russia-Ukraine war, GlobalData’s survey data indicates that interest in political risk cover is rising at a similar pace. 

A poll conducted across Verdict Media sites in the third and fourth quarters of 2025 found that although most insurance professionals expect cyber insurance to see the highest demand, around one in four respondents believe political risk insurance will also see significant growth. 

Demand for supply chain insurance is also expected to increase due to disruptions in major shipping routes.

Recent incidents have highlighted the risks, with missile strikes reported in parts of the region, including damage to the Fairmont at the Palm hotel in Dubai. 

Areas between Israel and Iran are seen as particularly exposed to missile activity and falling debris from intercepted drones.

Ben Carey-Evans, senior insurance analyst at GlobalData, said political risk insurance is becoming more important for businesses operating near conflict zones, as standard policies often exclude war-related damage. 

This means losses from military strikes may not be covered under traditional property or business interruption insurance, and claims could face legal disputes.

He added that the risk of damage from intercepted missiles or unintended strikes remains high in locations such as the United Arab Emirates and Qatar, increasing the need for specialised cover.

Major tourism centres, including Dubai and Abu Dhabi, are facing higher exposure as the conflict continues, with the potential for costly damage to high-value assets likely to support further demand for political risk insurance.

GlobalData said insurers offering political risk, cyber and supply chain cover are likely to see a surge in demand through 2026. 

However, the firm noted that underwriting these risks will be challenging, and insurers will need to carefully price policies and assess their exposure as geopolitical uncertainty persists.

The findings are based on a GlobalData poll of 84 respondents conducted across Verdict Media platforms in the third and fourth quarters of 2025.