Insurance Data Prices What Gulf States Won’t Say About War Risk

War risk insurance premiums for Gulf assets have jumped tenfold in a week, pricing regional instability more honestly than any official statement from Abu Dhabi, Riyadh, or Doha.

Hull war risk Insurance rates climbed from 0.25% to 3% for vessels valued at $200 million to $300 million, pushing premiums from $625,000 to $7.5 million per voyage, according to Reuters analysis by brokerage firm Jefferies. The repricing followed coordinated Iranian missile and drone attacks against US military installations, expanding to airports, seaports, hotels and oil refineries across the Gulf after US-Israeli strikes on February 28, 2026.

Drones struck three AWS Data Centers over the weekend, two in the UAE and one in Bahrain, according to Rest of World. The attacks forced Amazon to warn customers the regional operating environment “remains unpredictable” and recommend migrating workloads out of the Middle East entirely. Missiles and drones hit shopping malls, hotels, ports and airports in Bahrain, Dubai, Abu Dhabi, Oman, Jordan, Qatar, Kuwait and Israel, as well as an oil refinery in Saudi Arabia and LNG facilities in Qatar, according to law firm Kennedys.

The Insurance Signal Nobody Can Spin

Political violence insurance demand provides an objective metric for risk that diplomatic messaging obscures. Landmark assets and major hotels in the region are generally insured through specialist political violence and terrorism programmes, often with layered structures and reinsurance support, according to Insurance Business. Those structures are now being stress-tested as underwriters reassess accumulation risk.

Lloyd’s of London activated its major event response group, stress-testing syndicate books against the crisis, though cautioned it is “too early to draw conclusions while the situation continues to evolve”. The activation draws on Lloyd’s Realistic Disaster Scenarios framework, which maintains dedicated political risk scenarios for the region. War risk premiums for Hormuz transits rose from 0.05-0.15% of hull value to 0.3-0.7% or higher, law firm Stephenson Harwood told clients.

If attacks on Gulf infrastructure persist, watch for a spike in insurance premiums for facilities in the region and the inclusion of explicit “war risk” clauses in data center service contracts, directly increasing operating costs for cloud providers, according to data center research firm Enki. A new “security premium” for physical hardening, such as anti-drone systems and reinforced structures, will add an average of 15-20% to the total cost of new projects, industry analysts estimate.

Data Centers Join Critical Infrastructure

“Iran and proxies have targeted oil fields in the past, but their attacks this week on UAE data centers shows they are now considered critical infrastructure,” Patrick Murphy, executive director of the geopolitical unit at advisory firm Hilco Global, told CNBC. The targeting reflects a calculation that digital infrastructure now rivals Energy assets in strategic value.

Trump’s May 2025 tour produced $2.2 trillion in investment pledges built on the Gulf’s perceived strengths: political alignment with Washington, abundant sovereign capital, and world-class infrastructure. OpenAI, G42, Oracle, Nvidia, and SoftBank announced Stargate UAE, a planned 5-gigawatt AI campus in Abu Dhabi, according to Rest of World. A $5.3 billion commitment from AWS to build a new data center region in Saudi Arabia by 2026 now faces significant uncertainty and a mandatory security reassessment.

Brookfield Asset Management confirmed its $20 billion data center partnership with the Qatar Investment Authority will proceed, signaling that long-term institutional capital may tolerate the new risk environment, albeit with revised calculations. The decision indicates that sovereign co-investment and security guarantees can offset geopolitical volatility for patient capital.

Reinsurance Structures Under Scrutiny

Rather than focusing solely on frontline underwriting decisions, senior executives are reviewing ceded structures, portfolio aggregation and capital sensitivity, according to Reinsurance Business. Ben Rose, president of reinsurance trading platform Supercede, said insurance CEOs likely spent the weekend assessing exposures “based on the specific designs of their reinsurance programmes”.

There could be a wave of political violence claims for physical damage and destruction of privately-owned assets in the Gulf states and Israel. Many of those policies will be written by local insurers under local laws and reinsured into the London market. Questions may arise regarding aggregation of losses under political violence insurers’ outwards reinsurances, according to Kennedys.

A total loss of a large vessel could easily generate insured losses of $200 million to $300 million once hull, cargo and liability claims are combined. Reinsurers are likely to respond by lifting attachment points, tightening event definitions and cutting capacity, leaving primary carriers with greater retained risk. Jefferies analysts estimated that as of March 5, at least 7 ships have been damaged, with potential industry losses as high as $1.75 billion. Credit rating agency Morningstar DBRS warned that reinsurers may raise loss payout triggers or reduce underwriting capacity.

Government Response Creates Two-Tier Market

Trump ordered the U.S. Development Finance Corporation to provide “political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf”, according to CNBC. The DFC reinsurance facility will insure losses up to about $20 billion on a “rolling basis” and will apply only to vessels for now, focusing on hull and machinery and cargo, according to The National.

The intervention creates a bifurcated market where government-backed coverage competes with private underwriters who must reprice for accumulation risk without federal support. Brokers including Marsh have been in direct talks with DFC officials to structure a public-private framework that could complement rather than replace existing market capacity, drawing on the model used to underwrite grain exports from Ukraine’s Black Sea ports in 2023, according to maritime publication gCaptain.

Private war-risk insurers and underwriting markets responded to growing threats by withdrawing or significantly repricing coverage for traffic in and around the Gulf and the Strait of Hormuz. The resulting insurance vacuum contributed to an 81% collapse in transits at the height of recent hostilities, according to Reinsurance News.

Insurance as Geopolitical Barometer

When war erupts in the Middle East, insurance markets don’t react gradually; they snap. Underwriters retreat, capacity tightens, exclusions multiply. Withdrawals of war risk and political violence coverage across the region leave businesses asking what this means for Political Risk Insurance, according to risk consultancy GrECo.

“Tanker traffic depends not just on whether ships can technically pass through Hormuz, but on whether operators can obtain war-risk coverage. Once coverage becomes uncertain or prohibitively expensive, trade slows faster than the formal status of the waterway changes. Insurance, in effect, becomes the market’s enforcement mechanism for geopolitical fear,” Umud Shokri, energy strategist at Stimson Centre, told International Finance.

“Risks would increase if disruption persists.” A prolonged conflict could lead to weaker investor sentiment, falling asset prices and a broader economic slowdown across the region, Moody’s warned. War-related damage is generally excluded from standard insurance policies in the region. “The direct claims impact of the conflict will likely be negligible for all GCC insurers, as war risk is typically excluded from standard insurance policies in the region”.

That exclusion architecture means political violence premiums serve as a real-time pricing mechanism for instability that standard property coverage cannot capture. Businesses buying standalone political violence policies reveal risk perceptions that official statements from Gulf capitals systematically understate.

What to Watch

Monitor whether “the political violence and terrorism market remains open, though we expect to see at least a short term rating impact for exposures in and around the areas affected”, as Peter Bransden, head of crisis management at Willis, told Insurance Journal. The distinction between short-term repricing and permanent capacity withdrawal will determine whether Gulf infrastructure remains insurable at economic rates.

Track whether data center operators implement “the pricing of risk by insurers and institutional investors, which will ultimately dictate where the next generation of digital infrastructure can be built”, according to industry analysis from Enki. The security premium embedded in new project costs provides a measurable indicator of whether the Gulf remains competitive for AI infrastructure investment.

Watch Lloyd’s syndicate filings for loss reserving related to Gulf exposures. The timing and magnitude of reserves will signal whether underwriters view current pricing as adequate or whether a broader market correction is required. Insurance data won’t tell you what governments want you to hear. It tells you what capital thinks is true.