Rising geopolitical tensions in the Middle East are creating profound shifts in the global insurance landscape, with cyber insurance emerging as the fastest-growing coverage area amid escalating digital and physical threats. Industry analysts warn that companies are increasingly incorporating geopolitical risk into their cyber strategies, reflecting the intertwining of international conflicts and cybersecurity vulnerabilities.
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Surge in Cyber Insurance Demand
A third-quarter 2025 poll by GlobalData Plc found that 27.4% of insurance professionals expect cyber insurance to experience the largest surge in demand if geopolitical instability intensifies. This places it ahead of political risk coverage (25%), supply chain insurance (23.8%), and business interruption insurance (13.1%).
| Insurance Type | Expected Demand Increase |
|---|---|
| Cyber Insurance | 27.4% |
| Political Risk Insurance | 25% |
| Supply Chain Insurance | 23.8% |
| Business Interruption Insurance | 13.1% |
Charlie Hutcherson, GlobalData Insurance Analyst, explained, “Companies are increasingly recognising that cyber threats often accompany physical disruptions caused by international conflicts. Insurers are now pricing cyber risk not just through traditional political risk lines, but based on potential digital escalation.”
Cyber Threats Linked to Physical Conflict
Multinational businesses now face a rising likelihood of state-backed cyberattacks, digital espionage, and infrastructure-targeted hacks tied to geopolitical disputes. The ongoing US–Israel–Iran hostilities have heightened corporate concern over operational continuity, digital security, and international trade exposure.
Impact on Marine Insurance
The conflict is also reshaping marine insurance, particularly around the Strait of Hormuz, a critical chokepoint responsible for roughly 20% of global seaborne oil and LNG shipments.
| Risk Category | Pre-Conflict Rate | Current Rate |
|---|---|---|
| Hull War Insurance | 0.25% of vessel value | Up to 1% of vessel value (7-day coverage) |
David Smith, head of marine at McGill & Partners, highlighted insurers’ reluctance to cover ships transiting the strait: “Underwriters are highly cautious due to Iranian threats and retaliatory strikes. Even basic hull war-risk coverage is becoming increasingly difficult to secure.”
Although direct attacks on ships have been limited, insurance restrictions alone are reducing maritime traffic, with Bilal Bassiouni of Pangea-Risk noting that the strait is “effectively closed from an insurance perspective” due to suspended coverage.
Preparing for Interconnected Risks
Hutcherson emphasised that insurers must now account for both cyber and physical exposures simultaneously. Geopolitical conflicts are blurring traditional boundaries between digital and conventional risk, forcing a reevaluation of policy pricing, coverage limits, and concentration of exposure.
“Marine and cyber risks are no longer isolated,” Hutcherson said. “Insurers must develop strategies to manage complex, intertwined exposures that span borders and digital infrastructures, especially as conflicts escalate globally.”
The surge in cyber insurance demand reflects a broader recognition that geopolitical instability is inseparable from the digital risk landscape, signalling a transformation in how companies and insurers manage risk, protect assets, and ensure business continuity in an increasingly volatile global environment.