From a risk management perspective, the Iran-US MOU should be assessed beyond its immediate political implications. For the insurance industry, the key question is whether this framework creates sustainable regional stability or only provides a temporary reduction in uncertainty, according to Ms Ashwag Alzahrani, an actuary and co-founder of Saudi Arabia's Risk IQ Consulting.
Ms Alzahrani said, “The region has experienced prolonged geopolitical volatility, affecting foreign investment flows, supply chains, energy markets, infrastructure resilience, and insurance pricing. Recent conflicts have demonstrated how geopolitical shocks translate into higher energy costs, increased logistics risks, infrastructure exposure, higher costs of goods and services, and elevated insurance and reinsurance costs. These effects extend beyond direct physical damage, influencing business confidence, investment decisions, operational costs, and the overall cost of risk.
“A successful and sustainable agreement could represent a meaningful risk-reduction scenario by improving market confidence, reducing volatility, supporting trade flows, and gradually easing risk premiums. However, the insurance sector must recognise that geopolitical risk is not eliminated by the signing of an agreement; it is reduced only when commitments are credible, implementation is consistent, and stability is sustained over time.”
Three scenarios
Ms Alzahrani said that from an underwriting perspective, three scenarios should be considered:
Successful Implementation Scenario:
A sustainable agreement is achieved, leading to gradual normalization of markets, improved investment conditions, more predictable supply chains, and lower risk premiums.
Partial Implementation Scenario:
The agreement creates temporary stabilization while underlying uncertainties remain. In this case, insurers may maintain conservative pricing, capacity limits, and higher risk considerations.
Breakdown Scenario:
Failure of implementation during or after the 60-day period could lead to renewed escalation, increased market volatility, higher energy and logistics risks, and tightening reinsurance capacity.
For insurers and risk managers, the appropriate approach is not to assume that risk has been eliminated, but to continue scenario analysis, monitor exposure concentrations, develop innovative insurance and risk management solutions, and strengthen resilience strategies.
The MOU should therefore be viewed as a risk-mitigation mechanism rather than a complete risk-elimination event. The ability of the insurance sector to adapt, price, and manage emerging risks will remain essential in supporting regional economic stability.