Airlines face rising insurance premiums amidst Middle East conflict

Insurers and brokers are helping airlines develop programmes that reward better risk management.

Ongoing conflict in the Middle East is increasing operational and insurance pressures for airlines across Asia, according to Aon.

In a statement dated 9 April 2026, Stephen Rudman, head of Marine and Regional Aviation Lead, Asia at Aon, said the situation is creating a more complex risk environment, particularly affecting flight operations and cost structures.

Airlines have been forced to adjust routes as parts of the Gulf and wider Middle East airspace become restricted or carry a higher risk. 

These detours are leading to longer flight times, higher fuel consumption and, in some cases, payload limits on long-haul services. 

The impact is most visible on Europe–Asia and Africa–Asia routes, where carriers would normally rely on more direct flight paths. 

Over time, these changes are raising operating costs and reducing aircraft and crew efficiency.

To manage these challenges, airlines are increasing their use of digital tools and real-time data. 

Rudman said carriers are now treating geopolitical risk as an ongoing feature of the operating environment rather than a temporary disruption. 

This is leading to more formal policies on overflight and destination risk, as well as contingency planning for sudden airspace closures. 

Airlines are also placing greater emphasis on fleet and network flexibility to allow for quicker adjustments when key routes are affected.

Insurers and brokers are working with airlines to develop programmes that reflect stronger risk management practices, including structured routing policies and the use of advanced planning systems. 

There is also growing interest in alternative risk solutions such as captive insurance and parametric structures, which can help cover financial losses linked to route disruptions or airspace closures.

Rudman noted that Singapore, as a regional aviation and insurance hub, is central to these developments.

The impact on the local insurance market is being felt mainly in war-risk and political violence cover. 

Underwriters are increasing scrutiny of airline exposure to higher-risk regions, including both direct flights and overflights, and are assessing risks on a more detailed, route-by-route basis.

This has led to upward pressure on war-risk premiums, along with tighter terms and sub-limits for operations closer to conflict zones, reflecting a more cautious underwriting approach as geopolitical risks persist.