The Middle East war may lead to more insurance losses than the Russia-Ukraine conflict, according to Allianz Commercial.

“Notwithstanding the human toll of the [US-Iran] conflict, the political violence and terrorism insurance market in the Middle East has also been severely impacted, with losses concentrated in key sectors like oil, gas and transportation,” the insurer said.

“Damaged infrastructure could take years to repair, and the region’s risk assessment has shifted to medium to high, with some industries now considered high to extreme.

“The loss quantum has the potential to result in a costlier event than political violence and terrorism claims resulting from the war in Ukraine.”

The fallout is not restricted to the Middle East. Allianz Commercial says a heightened risk of strikes, riots and civil unrest is expected, particularly in countries heavily reliant on Middle East oil, gas and fertilisers.

“Nations with robust mechanisms to manage food and fuel price shocks may mitigate these risks, while others face elevated threats of rationing, unrest and looting.

“The US-Iran conflict is also likely to have a significant impact on risk mitigation moving forward, accelerating demand for political violence and terrorism insurance but also risk management and supply chain mitigation strategies such as nearshoring and friendshoring and supplier diversification.”

Concerns over political violence were already high before the Middle East conflict began on February 28.

Allianz’s annual risk survey results, released in January, showed political perils and violence placed seventh on a list of threats that most worry business leaders – their highest position on record.

More than half of respondents were most worried about war, overtaking civil unrest threats that had previously dominated.