Airlines Face Mounting Losses as Iran Conflict Widens

Insurance gaps leave carriers exposed to operational disruptions and revenue losses

Published on Mar. 2, 2026

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As the U.S.-Israeli air war against Iran escalates, the impact on airlines is becoming increasingly severe. Operations have been disrupted for three days, and revenue losses are not covered by insurers, according to analysts and industry sources. Travel stocks have plummeted globally, wiping billions off market value, as the conflict shuts down key Middle Eastern hubs and sends oil prices surging.

Why it matters

The widening conflict in the Gulf region is creating significant underwriting and investment challenges for insurers across multiple sectors, including aviation, marine, property, travel, and supply chain. Airlines face the risk of large hull and liability claims if missiles or air defense intercepts damage their aircraft, while the insurance costs for shipping goods through the Middle East Gulf have surged.

The details

Analysts say commercial property policies 'almost always' exclude war-related risks, and unlike marine and aviation exposures, such cover is not easily available as a separate policy. This means notable losses, such as potential damage to Dubai's iconic Palm Jumeirah, may not be covered by insurance. Aviation war policies also give insurers the right to cancel cover, while remaining non-war policies typically exclude war, either explicitly or under force majeure wordings. However, industry sources say aviation insurers are used to dealing with such events and there has so far been no notice of cancellation. While airlines have aviation war cover for their fleets, revenue losses from operational disruption typically fall under business insurance policies that include war exclusions, leaving airlines to foot the bill.

  • Operations have been disrupted for a third day as of March 2, 2026.
  • The U.S.-Israeli air war against Iran widened on Monday with no end in sight.

The players

Jefferies

A global investment banking firm that provided analysis on the insurance implications of the widening conflict.

Morningstar DBRS

A ratings agency that said the events create significant underwriting and investment challenges for multiple insurance lines.

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What’s next

Analysts are closely monitoring the situation to assess the potential long-term impacts on the insurance industry and the broader economy if the conflict continues to escalate.

The takeaway

The widening conflict in the Gulf region is exposing significant gaps in insurance coverage for airlines and other businesses, highlighting the need for more comprehensive risk management strategies to protect against the financial fallout from geopolitical crises.