Multiple insurance lines are set to be tested by the impact of the developing conflict in the Middle East, according to international law firm Kennedys.

The firm, which has an office in Bermuda, sees potentially simultaneous repercussions for political violence, marine, aviation, trade credit and political risk coverage.

Kennedys highlighted analysts’ concerns that targeted Gulf states “only have a finite supply of interceptor missiles and that Iran may be holding back its most potent missiles until those defensive weapons have been depleted”.

It suggests “there could well therefore be a wave of political violence claims for the physical damage and destruction of privately-owned assets in the Gulf states and Israel”.

Marine exposures include ships caught in the Persian Gulf on “the wrong side of the Strait of Hormuz”, potentially detained by the Iranian navy.

“If vessels are ultimately prevented from sailing out of the Persian Gulf, claims can be expected under loss of hire policies and potentially for total loss — the market default wording responds if a vessel is detained for 12 months,” the Kennedys article stated.

“Of course, the viability of the Strait of Hormuz may depend on action taken by the US and the Gulf states to keep the transit open. This may herald a possible return to the tanker wars of the 1980s.”

Kennedys cites an estimate of 135,000 containers in transit in the region with an approximate value of $4 billion. The firm makes the point that where war and strikes are written separately, the question of whether an incident is the result of war or terrorism will need consideration.

Grounded fleets of aircraft will be vulnerable to missile attack, with airports in Dubai Abu Dhabi, Kuwait and Bahrain already hit by Iranian strikes.

“Although the Aviation War market will no doubt be issuing review notices to remove cover (or reinstate cover on different terms) for the affected countries, following the decision of Mr Justice Butcher in AerCap Ireland Limited & Others v AIG & Others [2025], those aircraft may already be deemed to be in the grip of a war peril such that war insurers may still be liable for any subsequent loss of or damage to the aircraft,” the article added.

Kennedys notes that the disruption to the global oil and gas supply caused by the potential closure of the Strait of Hormuz for an extended period could cause a spike in energy prices that in turn triggers an economic shock.

“Any such global economic downturn would likely lead to a significant spike in trade credit and contract frustration claims as private obligors become insolvent and sovereign debtors, particularly importers of oil, struggle to meet their repayment obligations,” the article adds.

“Even if a global recession does not materialise, there may well still be contract frustration and trade credit claims if parties fail to honour their contractual delivery obligations due to the closure of the Strait or disruptions in oil and LNG production.”

There was also a possibility of claims under political risk policies for forced abandonment as western companies pull their personnel out of the region and cease activities due to the conflict, if the situation in the Gulf deteriorates further, Kennedys stated.

The article was written by Kennedys London-based partners, Andrew Westlake, Chris Zavos, Anna Haigh, Shaan Burton and Chris Chatfield.