Rising geopolitical conflicts have led to political violence insurance gaining momentum in the Middle East, as uncertainty reshapes risk perceptions. Insurance and reinsurance broker Cope’s Michel Darcy discusses how instability, diversification agendas and evolving threats are influencing demand, underwriting strategies and client engagement in the region’s PV insurance market.
Political violence (PV) insurance has seen steady growth in the Middle East, driven by geopolitical realities and greater investor awareness. Middle East Insurance Review spoke to Cope’s managing partner – specialty, Michel Darcy, who said that traditionally, “coverage was sought mainly by high-risk industries such as oil and gas, international chains, or infrastructure projects located in politically sensitive regions”.
Currently, several geopolitical tensions grip the oil-rich region, including the two-year Israel-Hamas war. The Gaza conflict has eased somewhat as Israel and Hamas reached a ceasefire agreement brokered by the US, under which Hamas freed the last surviving Israeli hostages in Gaza. At the same time, Israel released busloads of Palestinian detainees. However, tensions remain high.
Mr Darcy said such conflicts have contributed to increased demand for PV coverage, noting that “following periods of unrest in Lebanon and Iraq, even small and medium enterprises began seeking PV protection to safeguard their assets against unexpected losses.”
He added, “While geopolitical volatility has inevitably increased demand for PV coverage, it has also raised underwriting challenges, particularly in pricing and capacity. Conflicts such as the Russia–Ukraine war and the ongoing tensions in the Red Sea and wider MENA region have created ripple effects that extend far beyond their immediate geographies.”
The Russia–Ukraine war began in February 2022, and ceasefire talks led by the US in this theatre have largely stalled this year. Meanwhile, Yemen-based Houthi rebels have been attacking commercial ships in the Red Sea — one of the world’s most critical waterways — in protest against Israel and claiming to support Palestinians. It remains to be seen whether the conflict will subside following the truce between Hamas and Israel.
When asked how to mitigate risks arising from geopolitical instability, Mr Darcy said, “Risk mitigation requires a multi-pronged approach: diversification of reinsurer portfolios, enhanced scenario modelling, and close collaboration with local brokers who understand the political and security dynamics on the ground.”
PV insurance market
Mr Darcy described the PV insurance market as characterised by both growth and caution. Industries most actively seeking PV coverage include energy, construction, logistics, and, increasingly, financial services and tourism. “These sectors are vulnerable either due to their visibility, critical infrastructure role, or reliance on investor confidence,” he said.
He also noted that client education remains essential. “While client awareness has improved considerably, education remains an ongoing need. Many clients still equate PV solely with terrorism, overlooking broader risks such as strikes, riots, or civil commotion,” he added.
Other drivers of growth
According to Mr Darcy, diversification agendas in the region have further fuelled demand for PV coverage. “Regional governments’ ambitious diversification agendas – such as Saudi Arabia’s Vision 2030 – have encouraged both domestic and foreign investors to pursue comprehensive risk transfer strategies, which include PV as a key element,” he said.
Saudi Arabia’s Vision 2030, launched in 2016, is a national programme aimed at diversifying the kingdom’s economy and transforming its social and cultural landscape.
Emerging risks
Mr Darcy also pointed to emerging risks, including cyber threats and supply chain disruptions. “We are seeing a growing intersection between political violence and other risk categories, particularly cyber threats, disinformation campaigns, and supply chain disruptions. For instance, politically motivated cyberattacks on infrastructure could lead to physical damage or business interruption, blurring traditional lines of coverage,” he said.
Insurers, he added, can mitigate these risks “by integrating cross-class expertise – bringing political risk, cyber, and property under one analytical framework – and by investing in advanced data analytics and intelligence partnerships. Clear policy wording and innovative endorsements can also ensure clients are properly protected against emerging hybrid threats.”
Mr Darcy urged the industry to remain proactive and collaborative. “Political violence risks cannot be managed in isolation – they require deep partnerships across brokers, insurers, reinsurers, and even security consultants. Staying informed, investing in data-driven analysis, and prioritising client education are critical,” he said.
At Cope, Mr Darcy said the firm tailors its PV policies in line with global realities by:
- Customising coverages to address specific exposures such as physical damage, business interruption, or denial of access/loss of attraction.
- Offering flexible geographic scopes, particularly for clients with cross-border operations.
- Integrating security advisory services so that policies are not just reactive but also preventive.
- Maintaining close dialogue with clients and underwriters to ensure transparency around pricing, exclusions, and emerging risks.
Market outlook
Mr Darcy is optimistic about the PV insurance market. “The outlook for PV insurance is one of continued growth, but also increased complexity. As global and regional instability persists, demand will remain strong, particularly in emerging markets investing heavily in infrastructure and economic diversification,” he said.
He added that insurers should focus on three key pillars:
- Innovation in product design – covering hybrid and evolving risks.
- Data and intelligence integration – to price risks more accurately and sustainably.
- Client-centric engagement – educating and supporting clients to ensure policies are seen not just as protection but as enablers of long-term investment confidence. M