Insurers face over $3 billion in liabilities following the escalation in the conflict in the Middle East amid calls for greater collaboration to ensure that underwriters can fully understand the exposures.

Specialty risk intelligence company, Russell has issued its latest estimates which concluded the escalating geopolitical conflict exposes finance, insurance, real estate, and manufacturing companies to $3.5 billion in insurance liabilities across the MENA region.

By applying its specialty risk intelligence to an aggregated data analysis of the region’s most valuable sectors, Russell estimates the approximate liability as follows:

• $1.9 billion insurance liabilities for finance, insurance, and real estate.
• $1.6 billion insurance liabilities for manufacturing.

Meanwhile, business owners of airports, ports, shipping vessels, and aircraft face hundreds of billions of dollars of economic losses. The Strait of Hormuz alone is a recognised trade chokepoint with $407 billion of crude oil flowing through that major arterial shipping route annually, according to Russell.

These crude oil flows are equivalent to 23% of all global crude oil trade, according to Russell. Vessels have diverted from navigating the Strait of Hormuz, opting for the alternative route around South Africa, following Iranian retaliatory strikes on vessels.

Russell forecast of trade through the Strait of Hormuz in 2026 Q1 can reveal:

• Trade through the Strait of Hormuz is projected to be $167 billion.
• 70% of trade imports is to China, India, South Korea & Japan.
• 87% of trade is exported from UAE, Iraq, Kuwait, Qatar & Saudi Arabia.

The Iran conflict has also caused significant disruption to aviation traffic, with airports in Dubai & Qatar cancelling flights and grounding aircraft, as the conflict spreads throughout the region.

Russell’s analysis of 155 airports across the Middle East, revealed that on 28 February, 59 airports had aircraft on the ground, with 22 of these having an aggregate market value of aircraft of more than $1billion.

Out of the 22 airports, Dubai airport in UAE had the largest overall exposure with $7.86 billion. This was followed by Doha in Qatar with $5.98 billion, and Jeddah in Saudi Arabia with $5.49 billion.

Russell managing director, Suki Basi (above pic) explained:  “We are in a brave new world, where business viability requires clarity over threats which are increasingly complex, and interconnected. More collaboration and scenario planning is needed across finance, treasury, and risk management functions to assess the financial consequences of geopolitical events. This enables human intelligence to drive the scenarios and consequently the data analytics in risk assessment and mitigation, to achieve clarity.”

Russell’s data comes after McKenzie Intelligence Services said data and information was key if insures were to accurately assess the liabilities the conflict has created.

The company’s head of intelligence David Heathcote said: “In scenarios like these, insurers’ decision making is limited by the information available to them. In the absence of quality intelligence, often the decision is to take a step back from cover while getting a better understanding of the exposures and risk environment. The one thing the insureds do not have, however, is time to take stock.

“To uphold the value of the cover they sell, insurers need to be sufficiently well-informed to take proportionate, considered action and maintain cover wherever possible.”

He continued: “The situation is evolving rapidly. So far, the recorded strikes across the region have targeted military sites, energy infrastructure, port infrastructure, civilian airports, and high-profile hotels in countries with close proximity to Iran, including Saudi Arabia, Kuwait, Bahrain, the UAE, and Qatar, as well as a number of direct retaliatory strikes on Israel.

“A number of civilian international airports have been hit, and the straits of Hormuz are closed, with maritime traffic also being hit by strikes. The conflict is creating significant disruption throughout the region, with travel restrictions and business interruption likely to drive further losses down the line.

“Conflicts create a considerable amount of chaos which is often reflected in the reporting from media outlets, making it hard to cut through the noise and know what insights can be trusted. Insurers need trusted intelligence to be able to uphold the promise sold to their customers.”

IMAGE:  MIS GEO platform

Russell’s analysis of 155 airports across the Middle East, revealed that on 28 February, 59 airports had aircraft on the ground, with 22 of these having an aggregate market value of aircraft of more than $1billion.