As geopolitical tensions in the Gulf increase, UAE residents are closely watching how the situation could impact business costs, shipping routes, airspace access, and ultimately, insurance prices. A potential escalation in the Iran-US conflict raises questions about whether residents might face higher premiums in the near future.

Analysts from Moody’s Ratings indicate that any immediate impact on insurers in the region is expected to be limited. Their baseline scenario assumes the conflict would be relatively short-lived, lasting a few weeks, after which maritime and air traffic through the Strait of Hormuz would return to normal. Under this outlook, major financial stress on Gulf insurers is unlikely. Fitch Ratings also supports this view, noting that any closure of the Strait would probably be temporary due to its critical economic role. For UAE residents, this suggests that insurance premiums are unlikely to rise in the short term as a direct result of the conflict.

War-related claims are minimal Standard insurance policies in the Gulf typically exclude war-related damages. Moody’s points out that direct claims from military conflicts are expected to be negligible, with war risks usually covered only by specialist international insurers. As a result, regional insurers are not likely to face significant payouts tied directly to any military activity.

Investment exposure is the main risk The primary financial risk for insurers lies in their investment portfolios rather than their underwriting activities. Companies hold large stakes in equities and real estate, which can be affected by regional instability. Moody’s estimates that a 20% decline in property and equity values could reduce total equity for rated companies by roughly 7%. Large insurers generally have diversified portfolios and strong capital buffers to absorb such losses, while smaller insurers may be more vulnerable due to concentrated holdings and thinner capital cushions.

Potential impact on premiums Insurance pricing could come under pressure if the conflict persists and affects broader economic activity. Prolonged disruption may weaken investor confidence, lower asset prices, and slow regional economic growth. In such a scenario, insurers could experience slower premium growth and tighter profit margins, which might eventually lead to adjustments in insurance rates.

Key factors to monitor The following developments will be critical in determining whether premiums could rise:

• Duration and intensity of the Iran-US conflict

• Stability of shipping lanes and airspace in the Gulf

• Performance of financial markets and investment assets

• Overall economic growth across the GCC region

For now, analysts expect the insurance sector in the UAE to remain stable. Any future increase in premiums will largely depend on how long geopolitical tensions last and whether they start to affect the regional economy and financial markets.