The Jordan Insurance Federation (JIF) has released a working paper titled "Implications of the War on Iran for the Jordan Insurance Sector", outlining the risks and challenges associated with the war in the Gulf, and proposed responses to them.
The war has led to significant regional economic disruptions, including:
- Rising oil prices.
- Supply chain interruptions.
- Increased shipping and insurance costs.
- Rising political and security risks in the region.
Together with the de facto closure of the Strait of Hormuz and the increase in threats, the crisis affects the Jordanian insurance market through several channels:
1. Rising costs
- Higher marine insurance premiums.
- Increased reinsurance costs for local companies.
- Decreased profits for insurance companies.
- Increased overall insurance risks.
2. Indirect economic impact
- Rising oil prices lead to increased inflation and an economic slowdown.
- A decrease in investments and a subsequent drop in the demand for insurance.
3. Affected insurance branches in Jordan
Several branches of insurance have been affected by the war conditions, given their interconnectedness with the international geopolitical environment. In light of armed conflicts and maritime terrorism and piracy threats, insurers have been facing increased challenges in assessing risk levels and the cost of coverage.
The most affected branches in Jordan’s insurance sector include:
- Marine Insurance.
- Engineering Insurance.
- Travel Insurance (due to flight cancellations and rerouting).
- Credit Insurance.
- Health Insurance (affected by inflation).
- Motor Insurance (due to rising costs of spare parts).
4. Increased political and security risks
Missiles and drones fell in Jordanian airspace during the war, indicating heightened political risks in the region. This has led to:
- An increase in rates for insurance against political violence.
- Increased demand for political risk insurance.
- Rising costs of reinsurance.
- More stringency by international reinsurance companies.
Recommendations
JIF makes key recommendations for major stakeholders to consider:
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For the government: Develop a disaster risk management plan, support marine and commercial insurance, and strengthen cybersecurity.
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For insurance companies: Develop supply chain insurance, increase technical reserves, utilise actuarial models for war risks, and develop cybersecurity insurance policies.
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For the Central Bank of Jordan (the regulator): Monitor financial solvency, conduct stress testing, monitor reinsurance risks, establish a risk management framework, and support the establishment of a local reinsurance company.
Note: A fuller version of JIF's assessment will be published in the May 2026 edition of Middle East Insurance Review.