UAE Law and Practice Contributed by: Farida Safwat, Elham Mobini and Ramy George, NHB Legal
heightened conflict. In property and energy insurance, war and civil commotion exclusions are increasingly scrutinised where regional hostilities affect infrastruc- ture or operations, including outside direct conflict zones. Several dispute themes are emerging across these lines: • whether an undeclared, asymmetric conflict of this kind falls within standard war exclusion wording, given the historical precedent of insurers resisting cover in the absence of a formal declaration of war; • aggregation questions – whether losses from mul- tiple, dispersed incidents constitute one event or several, for policy limits and deductible purposes; and • the interaction between war exclusions and stan- dalone political violence and terrorism (PVT) cover, which cannot typically be cancelled mid-term and may leave insurers holding open exposure even as other lines are repriced. These issues remain largely untested before the UAE courts and, given the civil law system’s limited role for precedent, outcomes will likely turn on specific policy wording and the facts of each loss. 7.4 Supply Chain and Systemic Loss Events Disruption to the Strait of Hormuz, through which a substantial share of global oil and liquefied natural gas (LNG) exports normally transit, has produced pronounced systemic effects on oil and gas pricing, vessel diversion costs and container freight rates, with consequential supply-chain disruption extending well beyond the energy sector into manufacturing, retail and logistics. For UAE-exposed insureds, this has translated into aggregation and contingent business interruption questions across marine cargo and hull, and, accord- ing to recent market commentary, a genuine concern that Gulf offshore platforms, refineries and LNG termi- nals now represent a correlated, concentrated accu- mulation difficult to place on standard market terms. Supply chain-dependent insureds face similar aggre- gation questions where a single disruption event – a blocked transit route or a delayed shipment – triggers
correlated losses across multiple, formally unrelated policies and insureds. Beyond energy, marine and logistics, the UAE’s fast-growing data centre and AI infrastructure sec- tor – largely dependent on stable regional power and connectivity – have similarly been identified as new- ly exposed to this kind of systemic disruption. This points to a broader theme: geopolitical shocks are generating aggregation risk across sectors previously treated as unrelated, forcing insurers to reassess cor- relation assumptions embedded in existing portfolio and reinsurance structures. These dynamics remain largely untested before the UAE courts. 7.5 Forward Outlook and Market Response Geopolitical uncertainty in the Gulf is likely to remain the dominant factor shaping underwriting and dispute trends over the next 12–18 months, given the con- flict’s pattern of escalation and de-escalation rather than durable resolution. If the Strait of Hormuz remains closed or subject to intermittent closures, underwriting for Gulf-exposed risk is likely to remain highly cautious, with elevated premiums, constrained capacity and short-notice repricing remaining the norm. If a durable reopening is achieved instead, capacity may gradually return, though likely with more conservative wording and closer scrutiny of aggregation exposure than existed pre-conflict. Regardless of how the conflict trajectory unfolds, several trends seem likely: continued refinement of war, political violence and aggregation wordings to reduce definitional uncertainty; growing interest in government-backed or government-supported war- risk facilities, of the kind already seen supporting con- voyed transits during periods of acute disruption; and sustained demand for standalone political violence and terrorism cover as a complement to, rather than a substitute for, traditional war-risk policies. Dispute activity is expected to track this pattern – clustering around coverage and aggregation ques- tions during active escalation, and around claims set- tlement and renewal terms during periods of relative calm.
280 I NSURANCE L I T IGATI O N 2026
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