There’s a certain silence in the Lloyd’s underwriting room when something has really changed. People continue to trade, move, and write on slips. However, the conversations become longer and quieter as the volume decreases by approximately one-third. When the first real shockwave from the Iran conflict reached the aviation desks in late February, that was the reported atmosphere. That week, brokers reported experiencing an odd sensation that was more akin to recalibration than panic. As if everyone realized at once that the cozy presumptions of the preceding decade had recently come to an end.
The long-term harm to aviation insurance may not have been fully reported in the media thus far. The headline figures, which include sharper jumps for carriers operating Gulf routes, hardening hull war premiums, and liability rates rising by about 10% for clean accounts, are being reported fairly well. However, underwriters at WTW and Kennedys quietly acknowledge that it will take years to completely reverse the structural change that lies beneath those figures. Once practically treated as commodity coverage in some sub-segments, war-risk capacity is now carefully rationed by insurers, and once capacity is lost, it usually doesn’t come back for a long time.
Market commentary suggests that the industry did not truly take the lesson from Russia-Ukraine to heart. Instead, it picked up the incorrect one. A portion of the trapped-fleet exposure was settled by the Butcher ruling in 2025, but billions remain unresolved. Therefore, underwriters used a different tactic when fighting started in the Gulf: extra premiums layered on flight-by-flight approvals rather than exclusions or cancellations. In a sense, practical. Defensive, of course. However, every flight into restricted airspace now goes through an underwriter’s inbox, where a decision about whether to write it is made by someone in Zurich or London.
It’s difficult to ignore how drastically the language has changed as you watch this develop. Brokers discussed “soft markets” and capacity surpluses a year ago. Words like measured, sustainable, and scrutiny are now used by the same people. Stress-testing syndicates from the aviation, marine, energy, and political violence sectors were activated early by the London market’s major event response group, and Lloyd’s acknowledged that it was premature to make any judgments. Just that admission conveys something. Uncertainty is typically not published by insurance companies.
The public seldom notices how the ripple has affected operations. During the worst of the disruption, repatriation flights were a logistical frenzy that relied almost entirely on airlines, brokers, and insurers exchanging information more quickly than the news cycle. Underwriters are reportedly examining each individual exposure, and pre-existing exclusions for Iran, Iraq, Syria, Yemen, Lebanon, Libya, North Sinai, and Israel are still in effect. Major-power conflict, nuclear detonation, and requisition are all automatic war-risk termination triggers that have not been triggered. However, every contract has a seven-day notice clause, which is like a fire alarm that everyone knows where it is. These technical frameworks are covered in detail in publications written by Mishcon de Reya.
In certain instances, premiums for marine war risk increased by over a thousand percent, indicating the potential consequences for aviation in the event that hostilities resume. Earlier in the spring, the United States proposed a $40 billion reinsurance backstop; reports indicate that there have been no takers thus far, which is telling in and of itself. Only when private capital accepts the government’s price will public-private risk-sharing be successful. Apparently, it doesn’t at the moment.
It is still genuinely unclear whether all of this eventually unwinds or settles into a new permanent baseline. Older brokers believe that the Iran shock will be incorporated into pricing models for at least ten years because aviation insurance moves like ocean tides, which are slow, inevitable, and occasionally violent. Younger underwriters don’t seem as confident. In the past four years, they have witnessed two significant geopolitical insurance shocks. They believe the next one is already en route.
