Key transit cities such as Dubai, Doha, and Abu Dhabi reduced or temporarily halted operations as airlines redirected flights to bypass affected areas. Thousands of passengers, notably many Indians connecting via Gulf airports, remain stranded due to last-minute cancellations by carriers citing safety concerns.
The ongoing disruption has resulted in missed connections, prolonged layovers, and significantly increased rebooking costs.
As the disruption extends across air and sea routes, insurance has become a focal point of the response.
Travel insurance: What it can, and cannot, cover
Insurers report a surge in claims, mainly related to operational disruptions rather than medical issues.
Arun Ramamurthy, Co-founder of Staywell.Health, indicated that travelers are seeking reimbursement for extra hotel nights, meals, and rebooking fees incurred due to cancellations and delays.
Comprehensive travel insurance policies generally offer trip delay and interruption benefits, which reimburse reasonable expenses when a delay exceeds a specified limit. Clauses for missed connections may cover the cost of new tickets.
Most policies also provide 24/7 assistance services to help rearrange travel, emergency medical coverage for treatment abroad, medical evacuation support, and personal liability protection.
However, policies typically exclude direct losses resulting from war.
The critical distinction lies in the trigger: if an airline cancels a flight due to operational or safety issues, claims may still be eligible under delay or interruption coverage, depending on the policy language. Insurers recommend that travelers keep cancellation notices and receipts to substantiate claims.
War risk cover tightens in shipping and aviation
The impact is becoming increasingly structural in marine and aviation insurance.
Hari Radhakrishnan, an expert from the Insurance Brokers Association of India (IBAI), noted that the escalation could significantly affect marine cargo, hull, and aviation sectors. Reports of restrictions in the Strait of Hormuz, airspace closures, and renewed threats in the Red Sea have heightened risk perceptions.
He warned that war risk cover for new exposures might become unavailable or excessively costly in affected areas, potentially driving up shipping costs. For India, which relies heavily on crude oil imports from the Gulf, prolonged disruptions could have wider economic repercussions, including inflationary pressures.
Aviation insurers may also increase war risk premiums for operations associated with the affected regions.
GIC Re withdraws marine hull war risk cover
In response to the heightened risk landscape, the state-owned reinsurer General Insurance Corporation of India (GIC Re) has decided to withdraw Marine Hull War Risk cover in several designated high-risk areas, as reported in official notices.
This withdrawal will take effect from 1900 hours IST on March 3, 2026.
The affected regions include parts of the Persian or Arabian Gulf, Gulf of Oman, specific areas in the Black Sea and Sea of Azov, sections of the Red Sea and Gulf of Aden, as well as sanctioned jurisdictions.
As a reinsurer, GIC Re supports primary insurers underwriting marine risks. Its withdrawal indicates tighter reinsurance support in high-risk corridors, which may result in increased premiums or more stringent underwriting for shipowners.
Gaurav Agarwal, Vice President – Marine Insurance at Prudent Insurance Brokers, noted that the Persian Gulf and Red Sea–Suez Canal corridor have already been classified as high-risk zones, triggering additional war risk premiums. Historically, such premiums respond immediately to rising hostilities. Any sustained tension could lead to elevated 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, stated that several ports in the Red Sea region have been identified as High Risk Areas, where conventional war cover necessitates extra premiums.
However, the recent escalation has shifted the pricing dynamics.
“Given that active hostilities are now underway, previously established war risk premiums are proving insufficient,” he said, observing that vessels in the Persian Gulf face increased exposure, particularly due to the strategic significance of the Strait of Hormuz, through which nearly a fifth of global oil supplies transit.
He added that sections of the London insurance market have issued cancellation notices for war risk coverage under hull policies, with reinstatement potentially at much higher premiums. The cargo and protection & indemnity (P&I) sectors may undergo similar reassessments.
For shipowners and cargo stakeholders, obtaining cover—even at a higher cost—may become crucial amid the rapidly changing geopolitical risk landscape.
A risk repricing moment
While insurance cannot avert disruption, it can mitigate financial impacts within defined limits. Concurrently, insurers and reinsurers are recalibrating exposure in real time, reflecting how geopolitical volatility translates into elevated premiums, narrower coverage, and increasing costs across travel and trade.
