Key transit hubs such as Dubai, Doha, and Abu Dhabi have either reduced or temporarily halted operations, prompting airlines to reroute flights to steer clear of impacted areas. Thousands of travelers, particularly many Indians connecting through Gulf airports, are left stranded as airlines canceled flights with little notice due to safety concerns.
The consequences have resulted in missed connections, longer layovers, and steeply increased rebooking costs.
As the disruption extends across air and sea routes, insurance has taken on a central role in the response.
Travel insurance: What it can, and cannot, cover
Insurers report a rise in claims, primarily linked to operational disruptions rather than medical emergencies.
Arun Ramamurthy, Co-founder of Staywell.Health, mentioned that travelers are seeking refunds for additional hotel stays, meals, and rebooking fees incurred from cancellations and delays.
Most comprehensive travel insurance policies offer trip delay and interruption benefits, reimbursing reasonable expenses after a delay surpasses a specified limit. Missed connection clauses may also cover the cost of new tickets.
Additionally, most plans include 24/7 assistance services to help travelers rearrange their plans, emergency medical coverage for treatment abroad, medical evacuation support, and personal liability protection.
However, it’s important to note that policies typically exclude direct losses resulting from war.
The crucial difference is in the trigger: if an airline cancels a flight for operational or safety reasons, claims may still qualify under delay or interruption coverage, depending on the policy’s wording. Insurers recommend that travelers keep cancellation notices and receipts to support their claims.
War risk cover tightens in shipping and aviation
The effects are more structural within marine and aviation insurance.
Hari Radhakrishnan, an expert from the Insurance Brokers Association of India (IBAI), stated that the escalation could notably impact marine cargo, hull, and aviation sectors. Reports of restrictions in the Strait of Hormuz and airspace closures, along with renewed threats in the Red Sea, have heightened risk awareness.
He noted that war risk cover for new exposures could become unavailable or excessively costly in affected areas, increasing shipping costs. For India, which heavily relies on crude oil imports from the Gulf, prolonged disruptions might yield broader economic repercussions, including inflationary pressures.
Aviation insurers may also elevate war risk premiums for operations related to affected regions.
GIC Re withdraws marine hull war risk cover
In light of the increased risk environment, state-owned reinsurer General Insurance Corporation of India (GIC Re) has decided to retract Marine Hull War Risk coverage in several designated high-risk areas, as reported by media sources citing an official notice.
This withdrawal is set to take effect at 1900 hours IST on March 3, 2026.
The areas affected include parts of the Persian or Arabian Gulf, Gulf of Oman, specific regions of the Black Sea and Sea of Azov, stretches of the Red Sea and Gulf of Aden, along with certain sanctioned jurisdictions.
As a reinsurer, GIC Re provides support to primary insurers underwriting marine risks. Its withdrawal signals tighter reinsurance backing in high-risk corridors, which may lead to increased premiums or stricter underwriting for shipowners.
Gaurav Agarwal, Vice President – Marine Insurance at Prudent Insurance Brokers, mentioned that both the Persian Gulf and Red Sea–Suez Canal corridor have been marked as high-risk areas, attracting additional war risk premiums. Historically, such premiums tend to adjust rapidly in response to escalating conflicts. Ongoing tensions could result in higher freight rates, longer transit routes, and increased insurance costs for exporters and importers.
London market cancellations and rising premiums
Balasundaram R, Head – Marine Insurance at Policybazaar for Business, explained that numerous ports in the Red Sea area have already been designated as High Risk Areas, necessitating additional premiums for standard war coverage.
However, the latest surge in hostilities has shifted the pricing landscape.
“With active hostilities now underway, previously established war risk premiums are proving insufficient,” he remarked, emphasizing that vessels operating in the Persian Gulf face heightened exposure, particularly due to the strategic significance of the Strait of Hormuz, through which about one-fifth of global oil supplies pass.
He also highlighted that parts of the London insurance market have issued cancellation notices for war risk coverage under hull policies, with reinstatement likely requiring significantly higher premiums. The cargo and protection & indemnity (P&I) segments may face similar evaluations.
For shipowners and cargo interests, acquiring coverage—even at increased costs—may become vital amid swiftly changing geopolitical risks.
A risk repricing moment
While insurance cannot avert disruption, it can mitigate the financial impact within defined parameters. Concurrently, insurers and reinsurers are actively reassessing exposure in real-time, illustrating how geopolitical instability translates into increased premiums, tighter coverage, and rising costs across travel and trade.
