Escalating geopolitical tensions in the Middle East are triggering significant shifts in the global insurance market, with cyber insurance emerging as the fastest-growing line of coverage amid rising digital and physical threats. Experts note that companies are increasingly factoring geopolitical instability into their cyber risk strategies, as international conflicts increasingly overlap with vulnerabilities in digital infrastructure.
Surge in Cyber Insurance Demand
A third-quarter 2025 poll by GlobalData Plc found that 27.4% of insurance professionals expect cyber insurance to see the largest growth in demand if geopolitical tensions worsen. This outpaces political risk insurance (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 only through political risk lines but also based on potential digital escalation.”
Cyber Threats Escalate Amid Regional Conflict
Multinational firms are facing rising risks of state-backed cyberattacks, digital espionage, and attacks on critical infrastructure linked to geopolitical disputes. The ongoing US–Israel–Iran hostilities have amplified concerns over operational continuity, digital security, and supply chain stability.
Ripple Effects on Marine Insurance
The conflict is also affecting marine insurance, particularly around the Strait of Hormuz, a strategic chokepoint responsible for nearly 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 increasingly difficult to secure.”
While few vessels have been directly attacked, insurance restrictions alone are curbing maritime traffic, with Bilal Bassiouni of Pangea-Risk noting that the strait is “effectively closed from an insurance perspective” due to widespread suspension of coverage.
Managing Interconnected Risks
Hutcherson emphasised that insurers must consider both cyber and physical exposures simultaneously. As conflicts increasingly blur the line between conventional and digital threats, insurers are re-evaluating policy pricing, coverage limits, and concentration of exposure.
“Marine and cyber risks are no longer isolated,” he said. “Insurers must develop strategies to manage complex, intertwined exposures spanning borders and digital infrastructure, particularly as geopolitical tensions escalate globally.”
The surge in cyber insurance demand reflects growing recognition that geopolitical instability is inseparable from digital risk, signalling a transformation in how companies and insurers protect assets, manage risk, and ensure continuity in an increasingly volatile global environment.