Middle East tensions set to increase demand for cyber insurance - GlobalData
The Middle East conflict is expected to increase demand for cyber insurance, with GlobalData reporting that insurance professionals now see cyber cover as the commercial line most likely to be affected by rising tensions involving the US, Israel, and Iran.
GlobalData’s Q3 2025 poll of insurance industry professionals found that 27.4% of respondents expect cyber insurance to see the strongest increase in demand as geopolitical tensions escalate. By comparison, 25% pointed to political risk insurance, 23.8% to supply chain insurance, and 13.1% to business interruption insurance. The findings suggest that many market participants expect geopolitical shocks to appear in digital systems as well as through physical disruption.
Cyber incidents connected to state and non-state actors, sanctions, supply chain vulnerabilities, and operational technology are being considered alongside traditional war, marine, and political risk exposures. Charlie Hutcherson, insurance analyst at GlobalData, said: “Geopolitical flashpoints are increasingly being priced not just through marine war-risk and political risk lines, but through expectations of cyber escalation. GlobalData’s poll shows cyber insurance is viewed as the commercial product most likely to see rising demand, as businesses anticipate a higher probability of disruptive cyber events alongside physical disruption to trade routes.”
Developments around the Middle East energy corridor are offering a real-time test of how markets respond. Market reports indicate that several maritime underwriters have suspended war-risk cover for vessels operating in the Persian Gulf and nearby waters, while premiums for ships transiting the Strait of Hormuz have risen as carriers reassess accumulation, routing, and possible loss scenarios. Public-sector actions are also changing. The US Development Finance Corporation has signalled that it may extend political risk insurance and guarantees for maritime trade. In parallel, US authorities have indicated that naval escorts could be used to support tanker traffic in higher-risk zones, which may affect hull, liability, and stand-alone war covers.
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These shifts in marine and political risk are relevant because they show how conflict can extend beyond the immediate region. Hutcherson noted that corporate risk managers and underwriters are examining how cyber incidents linked to regional conflict could affect Western markets, critical infrastructure, and supply chains. “While underwriters are already reassessing exposures tied to shipping and energy corridors such as the Strait of Hormuz, the bigger shift is that companies are planning for conflict spillover into Western markets through cyber activity. As a result, insurers will face additional pressure to refine cyber risk appetite, pricing, and accumulation management if they want to meet customer needs and retain business in an increasingly volatile environment,” Hutcherson said.
Alongside the geopolitical backdrop, corporate investment in cyber risk controls is influencing how the market develops. Research by Marsh, based on responses from more than 2,200 cyber risk leaders in 20 countries, shows that nearly 75% of organisations report high confidence in their cyber risk management strategies. At the same time, 66% plan to increase cybersecurity spending in 2026, with more than one-quarter of firms expecting budget increases of 25% or more.
Read next: Cyber risk investments to shape 2026 insurance market - Marsh
Premium projections from major reinsurers point to further growth in cyber insurance. Swiss Re estimates that global cyber premiums will reach about US$16.4 billion in 2026, up from US$15.6 billion in 2025. Munich Re has projected that, under steady growth conditions, cyber premiums could more than double between 2025 and 2030, driven by higher limits and wider use of coverage across sectors. In the US, direct written cyber premiums fell slightly in 2024 as carriers focused on tighter underwriting, terms, and risk selection. At the same time, reinsurance capacity has risen, with roughly US$250 million in new cyber reinsurance capacity entering the market in the first half of 2025. This increase has led some insurers to offer higher limits and adjust coverage terms while seeking to control volatility.
For 2026, Marsh expects the combination of stronger internal controls at insureds and greater insurance and reinsurance capacity to result in more granular underwriting. Carriers are expected to rely more on evidence of governance, technical controls, incident response arrangements, and vendor management when setting limits, pricing, and terms. Policies may more clearly distinguish between insureds with established cyber programs and those with less developed frameworks. Organisations that can show tested controls and resilience measures may see different structures or retentions than those without such measures, including the use of sublimits or narrower cover for some risks.
Brokers and risk advisors are likely to take a larger role in helping clients align security posture with insurance requirements, including implementing control frameworks, running exercises, and presenting risk information in a way that fits underwriters’ models. Small and medium-sized enterprises, which remain comparatively underinsured in many markets, are expected to be an area of increased focus as awareness of cyber risk and available products grows.
Despite higher spending and greater attention to controls, the threat environment remains active. Ransomware, system attacks, and privacy breaches continue to be cited as leading global cyber threats. According to Marsh, about 70% of organisations experienced at least one material third-party cyber incident over the past year, underscoring the role of supply chain and vendor exposures in underwriting and portfolio management.
The combined signals from GlobalData and Marsh point to a cyber market influenced by both geopolitical conflict and corporate investment decisions. Middle East tensions and other regional flashpoints are reinforcing the view that cyber risk is a channel for conflict spillover, while higher security spending and growing reinsurance capacity are associated with more data-based and segmented underwriting. As carriers adjust appetite, pricing, and aggregation controls, and as insureds continue to invest in resilience, cyber insurance is likely to remain a widely used mechanism for managing both direct and systemic technology-related losses across global portfolios.
