The escalation in the Gulf following the Israel–US joint strikes on Iran is beginning to materially impact global trade flows, with direct consequences for Indian exporters and corporates with exposure to the region, industry experts said. 

Both exporters and insurers appear to be recalibrating risk assumptions. For Indian businesses with Gulf exposure, the focus is shifting from reactive claims management to proactive risk restructuring, amid a trade environment that is growing more volatile by the day. 

Rakesh Kumar, Founder and Managing Director of Square Insurance, told Fortune India that the Strait of Hormuz, which handles 20–25% of global oil trade and nearly 30% of LNG shipments, remains a critical chokepoint. 

“Even limited disruptions are driving freight rates up 15–25% and extending transit timelines by 5–10 days,” Kumar said. “Sectors such as gems and jewellery, pharmaceuticals, chemicals, and agricultural exports are already seeing margin pressure due to higher logistics and fuel costs.” 

Supply chain stress, rising war-risk premiums 

Kumar said supply chain disruptions are compounding the pressure. “Rerouting of vessels, port congestion and delayed cargo clearances are creating a cascading effect across industries dependent on Gulf trade corridors,” he said. 

From an insurance standpoint, war-risk premiums in sensitive zones have risen 30–60%. Insurers are increasingly shifting towards voyage-based underwriting and tighter risk evaluation. 

“This is adding roughly 0.2–0.5% to cargo value in insurance costs — a significant hit for price-sensitive exporters,” Kumar said. “Force majeure clauses are being widely invoked across shipping contracts, but insurers are scrutinising eligibility carefully. It is critical for businesses to understand exactly what their policy covers.” 

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Travel insurance demand surges 

Parallel to cargo disruptions, airspace restrictions and longer flight routes across parts of the Middle East are driving demand for travel-related insurance products. 

Kumar said corporates with teams or trade delegations heading to the region are increasingly opting for trip cancellation, interruption and political risk evacuation covers. 

“This is a phase of real-time risk repricing, where insurance is evolving from a safeguard to a strategic lever for trade continuity and balance sheet protection,” he said. “For businesses with Gulf exposure — whether through cargo, supply chains or corporate travel — the question is no longer whether to review coverage, but how quickly it can be done.” 

Corporate premiums harden selectively 

On corporate insurance premiums, Kumar said India Inc. with Middle East exposure is entering a phase of selective hardening. “Property and business interruption premiums have risen 10–25%, accompanied by tighter underwriting, higher deductibles and sub-limits on geopolitical conflict and civil unrest risks,” he said. 

Reinsurer caution is driving location-specific pricing, particularly in high-risk zones, even though overall capacity remains available. 

The sharpest pressure is being felt by Indian EPC and construction firms, hospitality chains, IT and facility services providers, and energy companies with upstream assets in the Gulf. 

A growing concern, Kumar added, is that many existing policies were not structured for high-intensity conflict scenarios. “Standard renewals may not adequately address these gaps. Contingent business interruption — where losses arise from supply disruptions, port closures or utility breakdowns in adjacent regions — is gaining prominence.” 

He advised CFOs and risk leaders to conduct comprehensive policy audits covering sub-limit adequacy, territorial scope and political violence extensions. “In a conflict scenario, coverage outcomes are determined well before a claim arises,” he said. 

Travel claims shift from medical to operational 

Arun Ramamurthy, Co-founder of Staywell.Health, said airspace restrictions and operational changes across parts of the Middle East have led to cancellations, rerouting and longer transit times for both direct and transit passengers. 

“We are seeing a rise in customer inquiries, particularly around itinerary changes, delays and missed connections,” he said. “Claims volumes are higher for operational disruptions than for medical issues, with travellers seeking reimbursement for additional lodging, meals and rebooking fees.” 

He said travel insurance can assist through: 

• Trip delay and interruption coverage for lodging, meals, and local transport 

According to Ramamurthy, while most policies exclude losses arising directly from war or conflict, airline operational decisions are typically treated as valid triggers for coverage related to itinerary disruptions. 

Insurers adopt cautious underwriting approach 

Ramamurthy said insurers and reinsurers are closely monitoring the fast-evolving geopolitical situation in the Middle East, given the region’s concentration of energy, infrastructure and trade-related risks. “For Indian corporates with assets, projects or supply chain exposure in the region, the immediate impact is less about blanket premium hikes and more about heightened scrutiny of underwriting and risk assessments,” he said. 

Insurers are reviewing exposure levels, security arrangements, business continuity plans and dependence on high-risk zones. Pricing adjustments, if any, are likely to be selective and risk-specific rather than applied across portfolios. 

Reinsurance capacity and global risk perception will play a key role in determining medium-term pricing trends, he added. 

Marine and reinsurance markets tighten 

Paramdeep Singh, Founder of Long Tail Ventures, said conflict in the Middle East is already pushing up war-risk and marine insurance premiums. “Even short disruptions can materially raise freight and cargo insurance costs as underwriters reprice geopolitical exposure,” Singh said. “With instability spreading to commercial hubs such as Dubai, aviation and commercial property covers will face tighter risk assessments.” 

He said reinsurance capacity typically tightens during such phases, with treaty pricing adjusting quickly. “This is when balance sheet strength and disciplined underwriting matter most for insurers,” Singh added.