Aviation insurers and reinsurers are tightening underwriting conditions and raising war risk premiums as the war in the Middle East intensifies with disparities appearing in the premiums airlines are having to pay.
An article published by the Financial Times on March 30 highlights growing concern among insurers over pricing inconsistencies, particularly for Dubai-based Emirates. The carrier is reportedly paying an additional war risk premium of around $100,000 per week to cover its entire fleet operating to and from Dubai, a level one insurance executive described as “outrageously low” given the heightened geopolitical risks.
Increasing burden
By contrast, airlines based outside the Gulf are being quoted between $70,000 and $150,000 per flight for operations into the region, reflecting a significantly higher cost burden for international carriers. Insurers cited Emirates’ scale, operational experience in the region and negotiating power as key factors behind the more favourable terms, as well as the importance of maintaining access to its business.
The divergence in pricing comes as the aviation insurance market grapples with a broader escalation in risk. Earlier in March, leading insurers including HDI Global SE, Allianz Global Corporate & Specialty and Starr Europe classified the situation across the Middle East as a material change in risk, requiring stricter underwriting controls.
Operators must now seek advance approval for flights into affected countries including Iran, Iraq, Israel, Lebanon, Saudi Arabia and the UAE, submitting detailed operational information to insurers. Failure to do so could result in loss of coverage, higher premiums or refusal of insurance altogether, according to market communications reported in early March.
Shifting market
The tightening of conditions reflects a wider shift in the aviation war risk market, which is already under strain following unresolved claims and capacity constraints linked to Russia’s invasion of Ukraine. A report from law firm Kennedys on March 20 warned that the Iran-related conflict is adding further pressure, with insurers reassessing exposure, adjusting pricing and, in some cases, issuing cancellation notices or revising policy terms.
Premiums for aviation war risk cover have risen sharply, with increases ranging from 50% to 500% depending on exposure, according to analysis published on March 23 by Lockton India Insurance Broking and Advisory Private Ltd. The report highlighted how missile threats, airspace closures and operational disruption have driven rapid repricing, supported by real-time intelligence and risk monitoring tools.
Reassessing capacity
Beyond pricing, the market is also facing structural challenges. Insurers are increasingly concerned about accumulation risk, where multiple aircraft or assets are exposed within the same conflict zone, while reinsurers are reassessing their capacity and pricing at renewal. These dynamics are expected to feed through into higher costs for airlines globally.
At the same time, coverage gaps are becoming more apparent. Many losses linked to delays, cancellations and rerouting fall outside standard war risk and liability policies, creating potential disputes over policy scope and leaving airlines exposed to uninsured financial impacts.
Cancellations growing
Legal advisers have also flagged the growing use of cancellation provisions in aviation war risk policies. A March 25 note from law firm Osborne Clarke highlighted that insurers are issuing short-notice cancellation or amendment notices, requiring policyholders to respond quickly to maintain coverage.
Despite these pressures, insurers have so far avoided widespread policy cancellations, instead seeking to reprice risk and impose stricter conditions. Analysts at Price Forbes said on March 30 that carriers are attempting to navigate policy triggers and adjust terms without triggering full withdrawals of cover, reflecting the complexity of balancing risk exposure with maintaining market relationships.
Operationally, the conflict is also reshaping airline behaviour. Airspace disruptions and security concerns have led to rerouting, longer flight times and higher fuel consumption, further complicating underwriting assumptions and increasing overall risk exposure.
Extreme event
For the aviation insurance and reinsurance sector, the current environment represents one of the most significant stress tests since 2022. While Gulf carriers appear to retain some pricing advantages due to scale and regional familiarity, the broader market is moving to tighter conditions, higher premiums and more granular risk assessment.
The outlook will depend heavily on the duration and escalation of the conflict. If instability persists, insurers and reinsurers are likely to further restrict capacity and raise prices, reinforcing a hardening market that could have lasting implications for airline operations and costs worldwide.