Middle East Conflict Spurs Surge in Cyber Insurance Demand

Escalating geopolitical tensions in the Middle East are driving a notable shift in the global insurance landscape, with cyber insurance emerging as the fastest-growing line of coverage amid rising concerns over digital and physical threats. Industry experts warn that companies are increasingly factoring geopolitical risk into their cyber strategies, reflecting the intersection of international conflict and digital vulnerability.

Rising Demand for Cyber Coverage

A third-quarter 2025 poll by GlobalData Plc indicates that 27.4% of insurance professionals anticipate cyber insurance will experience the largest increase in demand if geopolitical instability intensifies. This outpaces other major insurance categories:

Charlie Hutcherson, GlobalData Insurance Analyst, emphasised that geopolitical flashpoints are increasingly shaping corporate risk assessment. “Companies are recognising that cyber threats often accompany physical disruptions caused by international conflicts. We are seeing insurers price cyber risk not just through traditional political risk lines, but through expectations of digital escalation,” he said.

Digital Threats Amplified by Physical Conflict

Businesses now face the prospect of state-backed cyberattacks, digital espionage, and infrastructure-targeted hacks tied to geopolitical disputes. For multinational corporations, securing comprehensive cyber protection has become essential, particularly as conflicts like the ongoing US–Israel–Iran hostilities ripple through trade and commerce.

Impact on Marine Insurance

The conflict is also affecting marine insurance markets, particularly around the Strait of Hormuz, a strategic chokepoint responsible for approximately 20% of global seaborne oil and LNG shipments, according to S&P Global Market Intelligence LLC.

David Smith, head of marine at broker McGill & Partners, noted that insurers are increasingly reluctant to cover ships passing through the strait. “Underwriters are cautious due to threats from Iran and retaliatory strikes. Even securing basic hull war-risk coverage has become challenging,” he said.

Iran has threatened to target vessels attempting to transit the strait, and while few ships have been attacked directly, the absence of insurance coverage alone is discouraging maritime traffic. Bilal Bassiouni, head of risk forecasting at Pangea-Risk, described the strait as “effectively closed from an insurance perspective,” given widespread suspension of war-risk policies.

Preparing for Interconnected Threats

Hutcherson highlighted that insurers must now consider both cyber and physical exposures. Geopolitical conflicts increasingly blur the distinction between digital and conventional risks, forcing insurers to reassess policy pricing, coverage limits, and concentration of exposure.

“Marine and cyber risks are no longer isolated,” Hutcherson explained. “Insurers must develop strategies to manage complex, intertwined exposures that span borders and digital infrastructures, especially as conflicts escalate globally.”

As companies and insurers navigate this new environment, the surge in cyber insurance demand underscores the growing recognition that geopolitical instability is now inseparable from the digital risk landscape, signalling a transformation in risk management and global insurance practices.