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Middle East Businesses Face Coverage Gap as War Exclusions Come Into Focus

Companies operating across the Middle East are discovering a critical insurance blind spot as regional tensions escalate. Most businesses purchased coverage for terrorism and sabotage risks but failed to secure explicit war protection, leaving them exposed to significant uninsured losses.

Standard property insurance policies almost universally exclude war—a category broadly defined to encompass declared conflicts, hostilities, invasions, civil unrest and actions by sovereign powers. Full political violence policies can cover property damage and business interruption across multiple scenarios including terrorism, sabotage, riots, insurrection, rebellion and war. However, according to Marsh, the majority of regional operators bought only partial terrorism and sabotage coverage.

Industry experts attribute the gap to complacency. Companies grew comfortable with the region's relative stability in recent years and underestimated how quickly geopolitical risks could materialize. As missile strikes and maritime disruptions linked to Iran intensify, insurers and policyholders are now examining whether claimed losses qualify as terrorism or war.