Mon, 22 Sep 2025

Mon, 22 Sep 2025 Global conflicts drive demand for war risk insurance

Wars in Ukraine and the Middle East are fuelling take-up of cover against impact and damage.
The global war risk insurance market has seen exponential growth since the 9/11 attacks, with industry experts estimating that over $1 billion is spent annually on this type of coverage. The vast majority of policies are bought by companies operating in high-risk countries and regions, particularly those involved in energy facilities. Specialist insurers in London's City are at the center of the international war risk insurance market, accounting for nearly 80% of global spending. These companies offer a range of coverage options, including protection against kidnappings, ransoms, and terrorist attacks. The cost of war risk insurance varies widely depending on the country and region, with premiums ranging from 0.5% to 2% of the total cover for businesses operating in volatile areas like Lebanon or Israel. However, in stable Gulf states, premiums can be as low as 0.025% to 0.05%. Coverage options also vary, but typically include protection against sabotage, terrorism, kidnappings, and serious injuries. The war risk sector is organized into seven "buckets" spanning different severities of conflict. The challenge for the industry is determining the correct premium to charge for cover, as historical data on conflicts is limited and rare. However, experts note that war risk insurance can be highly profitable, with payout rates as low as 2% compared to car insurance, which typically pays out around 5%. London's Lloyds of London has been a hub for war risk insurance since 1689, and its strength continues to drive the industry forward. Reinsurers who buy and sell this type of coverage also play a crucial role in spreading out possible exposure. War risk insurance can be expensive, but it provides critical protection against unforeseen events like conflict damage or terrorist attacks. Companies operating in high-risk areas would do well to consider investing in this type of coverage to minimize losses and maintain business continuity.
  >>