The Iran war and its consequences for maritime traffic through the Strait of Hormuz have laid bare structural weaknesses in global insurance markets that were present long before the first strikes. Within days of the outbreak of conflict in late February 2026, war risk premium across the Gulf surged 500%, making transit economically unviable for most commercial operators.
The world’s 12 major protection and indemnity clubs, which collectively underwrite the majority of ocean-going vessels, moved rapidly to cancel war cover across the Gulf, while Lloyd’s Joint War Committee redesignated the entire region as a conflict zone. Private capacity withdrew at a pace that neither shipowners nor cargo interests had anticipated, exposing the degree to which the market had treated the disruption as a remote tail risk rather than a credible scenario requiring dedicated underwriting infrastructure.
The sector had entered 2026 in robust financial health, with reinsurance capital at historically elevated levels following several consecutive years of strong underwriting returns. Risk capacity for geopolitically-exposed lines had become heavily centralised in a small number of markets and institutions. When those institutions moved simultaneously, the gap they left was immediate and substantial for energy and logistics, as well as the global economy.
Governments as insurers
In response, the US government directed its International Development Finance Corporation to partner with domestic insurers to establish a reinsurance facility covering tens of billions of dollars in hull, cargo and liability exposure in an effort to stabilise commercial shipping through the affected corridor. The precedent set by sovereign institutions stepping in to backstop private insurance markets during geopolitical disruption has structural implications for how risk capacity is organised and where it needs to be developed.
Global specialty insurance – including marine, political risk and trade credit – is expected to triple by the mid-2030s as geopolitical events grow more frequent and complex.
Turkey and strategic positioning
Turkey’s insurance sector enters this environment with a combination of attributes that few emerging markets can match. With gross written premium exceeding $25bn, it constitutes the largest insurance market in the arc between the Middle East and Europe, giving it the scale to attract the reinsurance partnerships and foreign capital that deepening its specialised lines capability would require.
The sector’s historical experience of foreign ownership demonstrates its capacity to integrate with international capital structures. Macroeconomic stabilisation, including a sovereign rating upgrade from Moody’s, has improved the conditions for renewed foreign engagement.
Geographically, Turkey sits at the intersection of the trade corridors most directly affected by the Hormuz disruption. Marine, cargo, political risk and trade credit are precisely those for which Turkey’s location and regional relationships provide a natural underwriting vantage point.
Kenya and reinsurance
Kenya’s path towards regional insurance is rooted in a different set of structural advantages. Kenya Re has built a diversified reinsurance portfolio spanning multiple African markets, as well as Asia and the Middle East, supported by a mandatory cession arrangement that provides a stable base of domestic premium income. That institutional foundation, combined with Nairobi’s established position as East Africa’s financial services centre, gives Kenya Re the platform to expand its intermediary role as African insurance penetration, which is currently well below global averages, continues to develop.
The broader African insurance market is approaching the current period of volatility from a position of relative resilience, with well-capitalised local institutions expected to respond to the changed pricing environment through more disciplined underwriting rather than withdrawal. The cross-border regulatory frameworks taking shape across East Africa, including financial technology passporting arrangements between Kenya and Rwanda, are creating the financial integration infrastructure on which a deeper regional insurance market can be constructed.
By exposing the fragility of concentrated risk capacity, geopolitical volatility has created both the demand and the incentive for a geographically more evenly distributed global insurance architecture and that markets like Turkey and Kenya are well positioned to take advantage of as a result.
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