Israel, Iran, Lebanon: three very different coverage landscapes
The conflict has produced starkly different insurance outcomes depending on which country’s assets are involved. In Israel, the state-owned Inbal Insurance Company absorbs much of the property damage and business disruption through government mechanisms. Private insurance loss estimates, while significant, look modest relative to actual damage precisely because the state backstop is absorbing the bulk of it.
Iran presents a different problem entirely, and the reason is sanctions. "Even if a claim is facially valid and the policy clearly covers the loss, OFAC [Office of Foreign Asset Controls] regulations and EU sanctions rules can prohibit the actual transfer of claim proceeds if any party in the transaction chain has a nexus to a sanctioned person or jurisdiction," Wilde explains. Global insurers are not covering Iranian assets because they legally cannot; the risk sits with the Iranian state and whatever domestic mechanisms exist — themselves constrained by the same sanctions that exclude Western capital.
Lebanon may be the most exposed of the three. According to GlobalData‘s market analysis, war risk insurance and reinsurance are now the defining pressures on the Lebanese market, with reinsurers introducing cancellation provisions tied to regional escalation — meaning coverage that exists on paper can be withdrawn as conditions deteriorate. A Credit Libanais analysis of data from Lebanon’s Insurance Control Commission shows the country’s entire insurance market generated only around $1.3 billion in gross written premiums in 2025, with property and casualty accounting for less than 20% of that total. The figures reflect how little corporate and property risk is insured in Lebanon even in peacetime.
Why standard policies were not built for this conflict
Commercial insurance policies were drafted for an era of conventional warfare: declared conflicts between identifiable states on defined battlefields. Modern hybrid warfare — drone strikes, missile attacks, government-ordered port closures, Houthi interdiction of commercial vessels — falls into legal grey zones that carriers increasingly classify as acts of war and exclude from standard coverage. The 2017 NotPetya episode was an early warning: years of litigation followed before courts and markets settled on how to treat state-backed cyber operations. The Iran conflict is producing a similar reckoning across multiple lines simultaneously.
Cyber, physical damage, and the clauses CFOs never read
Beyond marine and property lines, the conflict has exposed a cluster of coverage gaps that Wilde argues most corporate finance teams have never seriously examined. Business interruption without direct physical damage is among the most significant. Courts have consistently required a physical loss nexus to trigger coverage, and most geopolitical disruptions produce none: a supplier goes offline because its port is closed, a shipment is delayed because a vessel operator declines to transit the strait, revenue disappears — but nothing physically broke, and no policy responds.
Confiscation and political risk coverage carries a parallel problem. Companies often assume these policies cover government interference with overseas assets, but many carve out losses tied to sanctions compliance or dealings with already-restricted jurisdictions. Contingent business interruption shows a similar gap: upstream supplier disruption may be unrecoverable if the supplier’s assets touch a sanctioned entity or territory.
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