A wave of guarded but firm optimism has followed the Memorandum of Agreement on a US-Iran peace deal, according to Mr Suresh Nair, Executive Director of Gargash Insurance, which is a Dubai-based insurance broker.
He pointed out that the UAE has stressed the need for swift implementation and the reopening of the Strait of Hormuz to shipping. Backed by a resilient pre-war economy and a series of measures forming part of a long-term strategy — economic relief packages, new trade and logistics corridors, focus on AI, etc among others — the UAE is well placed to move past the conflict’s detrimental effects faster than its regional peers.
However, the path to stability remains volatile. While the MoU initially provided for a 60-day ceasefire, it was broken mere days after the 17 June signing.
Insurance market
If a lasting accord is reached, local construction and property insurance markets stand to benefit because ongoing projects are going ahead full steam and several major new infrastructure initiatives are underway,
Mr Nair said, “War risk premiums are expected to ease gradually, a trend that should accelerate once the Strait reopens and marine insurance markets are convinced that the Hormuz is safe for shipping as before.”
Many clients showed growing interest in specialised covers such as political violence and cyber but deferred purchase amid the high costs and deductibles of the conflict period, he said. These clients are expected to resume discussions with insurance providers when the geopolitical tensions ease.
Mr Nair said, “With the economy recovering quickly, sentiment turning increasingly positive, and the unleashing of pent-up demand across travel, hospitality, real estate and aviation, the UAE insurance market has solid grounds to be fully back on track in short order.”
The insurance market typically lags the broader economy by around six months, he explained.