The resumption of the war in the Gulf on 9 July came as no great surprise, despite widespread hopes that June’s Memorandum of Understanding (MoU) on a ceasefire deal would stabilise the markets, especially oil. By late July, Brent crude broke past $90 per barrel for the first time in a month, triggered by a nearly 40% drop in oil shipments passing through the critical Strait of Hormuz.
The conflict has entered a critical juncture that portends severe consequences, marked by an expanding scope of attacks targeting highly critical infrastructure, such as direct strikes on power and water desalination facilities in Kuwait. Fears grow that the conflict will expand further such as to the Bab Al Mandab Strait, which threatens to exacerbate the negative effects on the Arab region and the whole world.
Assessing the full extent of war-related losses is complex, depending on their nature–direct, indirect, insured or uninsured. Furthermore, disclosure restrictions aggravate the uncertainty by limiting the information available for estimating the damages. Beyond losses, economic growth is expected to slow. The UNDP has previously expected that the escalation in the Middle East might cost 3.7% to 6% of the collective GDP of economies in the region. This would translate to a staggering loss of $120bn to $194bn, which exceeds the cumulative regional GDP growth achieved in 2025.
Despite the armed conflict, insurance markets in the region are reportedly delivering positive and encouraging results in the first half of the year. However, industry players are already assessing the implications of a highly uncertain environment and bracing for a more challenging period ahead.
Our August issue focuses on political risk insurance, a branch of business that has seen a significant surge in demand amid ongoing geopolitical tensions. Yet, for (re)insurers, conflict dynamics are changing the risk landscape, with pricing, terms and capacity increasingly impacted by heightened levels of uncertainty and exposure to risks. A key challenge for this niche segment is its relatively small scale. Political risk insurance premiums account for a meagre percentage of the global non-life premiums (around 0.05%). Regionally, the proportion is even smaller. Consequently, a single major loss event—which is increasingly likely in the current environment—can have a disproportionate impact on the overall portfolio.
This month’s market profile highlights Turkiye, an interesting market with aspirations to reach the top 10 global insurance markets by 2030. Turkish industry players are actively pursuing this goal, backed by comprehensive regulatory reforms and new growth areas, such as takaful.
With summer drawing to a close, the sector enters a demanding stretch. Navigating the impacts of the Gulf war will require heightened vigilance, even as the industry gears up for a busy season. We wish our readers and partners a resilient and productive remaining months of the year. M
Osama Noor
Editor
Chief Representative
Middle East Insurance Review