In the wake of accelerated conflict in the Middle East, insureds are advised to carefully review their terms and conditions regarding business interruption insurance to ensure that they are aware of any exclusions.

Mahesh Mistry, senior director, head of analytics at AM Best said marine, trade credit and political risk insurance will likely see the most direct and immediate impacts.

“While cyber insurers have been excluding war or state-sponsored attacks, there are products that cover war risks that could be affected in the medium term if cyberrisks escalate by state-sponsored actors,” Mr Mistry said.

He predicted that reinsurers in the Middle East will be closely monitoring the conflict there as it spreads across the countries of the Gulf Cooperation Council and the Levant region.

AM Best said following the targeting of civilians, infrastructure and shipping in non-combatant states, a joint statement cosigned by the affected states of Bahrain, Jordan, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates states that the actions represent a dangerous escalation that threatens regional stability.

Mr Mistry did not rule out the possibility of the conflict spreading globally, following the launch of drones towards targets in eastern Mediterranean European Union countries such as Cyprus.

“There are potential inflationary pressures as a result of a sudden rise in petrochemical prices and supply chain disruptions,” Mr Mistry said.

Marine insurers have been quick to adjust pricing in directly affected and regional waters, AM Best said, adding that while much coverage has been given to oil price increases due to tankers being unable to proceed through the Strait of Hormuz, the export of liquefied natural gas is equally vulnerable.

Qatar, one of the largest exporters of LNG, has shut down its production facilities.

Mr Mistry added that while large property risks, such as refineries and infrastructure are reinsured on the international market, domestic insurers generally retain little of the risk.

Military conflict exploded in the region on Saturday, following a large-scale joint military operation by the US and Israel against Iran, called: Operation Epic Fury.

Iran retaliated with missile barrages and hits to American and British tankers. Meanwhile, Iran’s Supreme Leader Ayatollah Ali Khamenei was killed.

AM Best continues to monitor and assess the evolving situation and any impact on ratings.