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For carriers who bought their “Losses Occurring During” reinsurance at 1 January, there is less uncertainty from an ‘in-force’ coverage standpoint.
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However, for those renewing at 1 April, there may be reinsurers focusing on coverage in this region as negotiations take place.
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1 April quotes coming in so far suggest no exclusions and a pragmatic approach to where Middle Eastern exposure exists.
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The US government backstop potentially introducing capacity will also ease discussions for 1 April. However, there are currently too many unknowns for reinsurers to provide coverage as they did at the previous 1 January.
Monitoring
The market is not expecting a broad-based hardening, but rather a more targeted adjustment at 1 April.
About 25% of the Global/London Marine, Energy and Transport (MET) XL programmes renew at 1 April, and there has been no material shift in reinsurer pricing sentiment and still largely aligned with prior 1 April trends where structures remained largely unchanged.
The primary MET market capacity stands at an all-time high, with reinsurance maximum single programme limits reaching c. $1bn, up ~30% since January 2023. Excess supply should continue to support cedants at renewal, with some negotiations around WTPV event definitions and Marine Hull/Cargo War, where current loss activity is still in focus.
There is greater focus on exposures for routes passing through the Strait of Hormuz in response to the conflict for the upcoming 1.4 renewals. However, due to the fast-changing nature of the situation, many are standing by and watching from the sidelines.
The notice of cancellation provision of war coverage essentially applies to Marine Hull & Cargo business. Despite the volume of traffic passing through the Strait of Hormuz (aggregated values c.$3bn), it is difficult to forecast the impact on premiums. For relative context on the size and impact, Marine Hull and Cargo War represent 2-3% of the total marine insurance market.
More discipline
Capacity is not expected to withdraw, but rather to be deployed with greater discipline. Reinsurers are likely to reduce line sizes on Middle East-exposed treaties and avoid over-participation on programmes with high energy concentration, port exposure, or state-backed infrastructure. Programmes will continue to be fully placed, though potentially with more markets and more measured line size. This is expected to be underpinned by a heightened focus on aggregation and accumulation risk, driven by cross-border missile ranges, maritime chokepoints, energy hubs, and potential cyber-physical escalation.
Overall, this is not expected to represent a systemic treaty market shift, but rather a regional hardening with practical implications for MENA focused programmes. The strategic response is therefore less about panic and more about technical discipline: diversifying panels, presenting clean and well-segmented portfolios, strengthening data transparency, and adopting thoughtful structuring to manage retentions and aggregation.
Property Cat and Risk XL treaties with Gulf and Levant exposure are expected to be repriced to reflect heightened geo-political uncertainty, even where war remains contractually excluded. Reinsurers are likely to increasingly load for missile and drone spillover risk, infrastructure and energy concentration, and port or industrial zone accumulation. Pricing pressure would be most visible on lower layers, where attritional and shock losses would typically sit.
Marine and Energy treaties are expected to see a less significant impact than what was initially expected. Event definitions and pricing have remained stable, with reinsurers opting to impose loaded reinstatements for losses as a result from events in the Middle East. Marine Hull and Cargo programmes with limited exposure have largely seen terms and conditions similar to those bound at 1 January.
Political Violence capacity will continue to be available due to pricing adequacy still being largely improved compared to more recent years. Reinsurers with more significant participations may become more selective, with further scrutiny given to underwriting strategy in the Middle Eastern region going forward.