Navigating a market in motion: PV&T at the 1.7 renewal

The Political Violence and Terrorism (PV&T) reinsurance market is contending with an unusually dynamic environment during the 1 July renewal season. A sustained series of strikes involving IRGC-linked targets has reshaped underwriting appetite across the region, while broader shifts in global risk, from civil unrest in the Americas to active assailant events in Europe, are compounding the challenges facing both incumbents and new market entrants.

Capacity constrained, appetite evolving

In the immediate aftermath of the escalation of Middle East strikes, most in the region took a "pens down" approach to new enquiries. Since then, appetite has gradually reopened, though unevenly. Several markets that were previously closed have revised their positions, while others are now only reviewing firm orders, a reflection of the volume of inbound business, with some reinsurers receiving in excess of 50 submissions per day.

In the Middle East, many reinsurers are currently declining risks involving Western interests and certain critical infrastructure sectors: airports, oil refineries, desalination plants, ports and similar exposures. Acceptable occupancies remain difficult to define with precision, given that strike target lists continue to evolve on a near-daily basis. Capacity is being deployed in deliberately limited line sizes, with single-location risks and smaller limits achieving significantly greater success than large, multi-location programmes.

Wajih Tabbara, Head of Property, Construction & Political Violence, Howden Re Dubai, commented: "The market has moved quickly, and continues to move. What we are seeing is a market working through the consequences of a significant loss event in real time. Limited capacity, tighter controls, and underwriting decisions are being made against a target list that can change within 24 hours. For clients in high-exposure territories, the priority is securing cover now, with clean risk data and a clear narrative around exposure management."

Loss estimates and the protection gap

Early market estimates suggest that insured losses arising from recent events and associated strikes could exceed USD 3 billion, with overall economic and uninsured losses expected to be materially higher. The gap between insured and uninsured losses is anticipated to remain significant, reflecting the concentration of assets in regions and sectors where PV&T coverage is either limited, excluded, or purchased at insufficient limits.

Beyond direct physical damage, reinsurers are closely monitoring the potential for prolonged business interruption, supply chain disruption, and broader economic consequences across critical infrastructure, energy, logistics, and transportation sectors. Concerns remain elevated around the possibility of further escalation, retaliatory actions, and the widening geographic spread of exposures across the region.

Pricing: upward pressure and tightening controls

The market is already experiencing upward pressure on rates, tighter underwriting controls, reduced line sizes, and increased attachment points. Risks in perceived high-exposure territories face continued challenges in securing broad coverage and adequate capacity, particularly for standalone Political Violence placements.

At the same time, a new dynamic is emerging. New capacity entering the market, notably from recently established MGAs and syndicates setting up PV&T as a line of business.

Despite the current volatility, markets with established regional expertise and disciplined exposure management continue to selectively deploy capacity, particularly on well-protected risks with strong risk management standards and clear exposure data.

Beyond the Middle East: a global picture that cannot be ignored

While the Middle East continues to dominate the PV&T narrative, conditions in the wider market warrant equal attention. Premium income across the class is estimated at around USD 1.5 billion globally, set against insured loss estimates that are already approaching double that figure. That imbalance has implications well beyond any single geography.

A pattern of smaller, geographically dispersed incidents is building alongside the major conflict scenarios. Civil unrest events, active assailant incidents, and riot activity have been recorded across the Americas, Europe and Africa in recent years. The cumulative attrition from these events is increasingly material to overall class performance.

Olivia Pullen, Director, Terrorism and Political Violence, Howden Re London, commented: "The class is entering a new phase. The large-scale conflict scenarios in Ukraine and the Middle East are well understood by the market, but what we also need to be increasingly focused on is the accumulation of smaller events happening in pockets across the world. These incidents are sometimes less visible individually, but they add up. There aren’t many territories now genuinely considered risk-free from a PV&T and extended perils perspective. Disciplined, globally-diversified underwriting has never been more important."

Outlook to 1 July and beyond

Depending on the duration and scale of further escalation in the Middle East regional treaty aggregates are expected to come under increasing stress. If sustained, this could prompt retrocession markets to adopt a more cautious approach to capacity deployment, accumulation management, and overall exposure to PV&T risks within the region.