When the Shooting Starts, Do You Know What Your Insurance Policy Says?
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August 25, 2026
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No company is immune to the turbulent geopolitical events that can expose them to material financial risk. From farmers needing fertilizer to logistics firms operating ocean-going vessels, supply chain and trade route disruptions caused by global armed conflicts can wreak havoc on businesses. The key risk is that even strong insurance policies may still leave coverage gaps during geopolitical events.
Conflict-related risks are often excluded from or constrained in many types of insurance, such as business interruption policies. As a result, insurers typically reserve the right to cancel existing policies within a specified window, e.g., seven days, to reassess the risk and offer a new policy priced accordingly. They can also restrict coverage, leaving the insured unprotected.
What steps can insureds take to manage their coverage, understand contractual triggers, and prepare for conflict-related disruptions?
Don’t Let Conflicts Expose Coverage Gaps
Too often, insureds are unaware of which policies may be at risk of cancellation or how exclusions and trigger clauses can impact coverage. This knowledge gap can translate into considerable financial exposure when geopolitical tensions escalate.
Maintaining a centralized inventory of policies, limits and premiums is important, but inventory alone is not a risk strategy. Organizations must also understand the exclusions, cancellation provisions, and triggering events that could materially affect coverage during periods of geopolitical instability.
Here are a few questions insureds should ask themselves and their brokers to mitigate geopolitical risk:
- What qualifies as a war or an armed conflict?
- How does the policy determine whether those events are the root cause of the disruption?
- What are the notification and response requirements for the insurer and the policyholder?
Conflicts can spring up anywhere in the world without warning, especially when they don’t involve NATO countries and consequently have reduced visibility. Since they are difficult to predict, organizations must be prepared to proactively reassess coverage, identify protection gaps and strengthen long-term resilience. Conflicts also extend beyond war and can include terrorism, political unrest and sanctions.
Conflicts can cause sudden spikes in premiums or flat-out cancellation of coverage, and they can lead to major disruptions in commercial markets.
Policyholders should work with their brokers to proactively plan for alternative coverages. These may include political risk insurance to protect assets and revenue from war, trade credit insurance for liquidity and financial backing for supply chain delays, among others.
In some instances, depending on the risk, an insurer may be willing to reinstate coverage or offer reduced coverage for additional premium.
Case Example: Jets Grounded After the Russian Invasion of Ukraine
When Russia’s invasion of Ukraine led to legislation in Russia preventing aircraft from leaving the country, global lessors like AerCap discovered that coverage outcomes depended on loss classification. While AerCap ultimately recovered more than $1 billion under war-risk insurance, this was far less than the roughly $2 billion it sought under broader all-risk coverage.1
This real-world example demonstrates how the classification of a loss, rather than the loss itself, can significantly affect insurance recovery during periods of geopolitical instability.
Early Warning Signs You May Have Gap Risk
Future-proofing a risk strategy requires more than insurance adjustments. To understand and mitigate geopolitical risk, insureds need strong governance, clear risk ownership and continuous monitoring of developments that might impact coverage.
In addition to the examples mentioned above, here are some early warning signs that your coverage may be vulnerable. Insureds and brokers should analyze policies and coverage through this lens to quickly understand potential risk and impact. These indicators include:
- Heavy reliance on a single geographic region
- Dependence on ocean transit through conflict-prone corridors
- Material suppliers located in sanctioned or politically unstable countries
- Lack of political risk or trade credit insurance
- Policies that have not been reviewed outside the renewal cycle
While insureds exposed to one or more warning signs may not be in imminent danger of gap risk, this should serve as a wake-up call to revisit policies. Rather than remain in reactive mode, insureds should look to be proactive to avoid disruptions. Governance is key to ongoing resilience and vigilance.
Building Resilience Against Future Coverage Disruptions
Strong governance starts with continuous visibility into insurance, supply chain and operational exposures. To strengthen resilience, insureds should focus on three key areas:
Coverage Management
- Continually evaluate insurance programs against evolving geopolitical developments
- Promptly notify carriers of potential claims
- Document all losses and mitigation measures
Supply Chain Visibility
- Monitor inventory exposure and evaluate alternative markets or higher inventory levels when disruptions are anticipated.
- Map trade routes, assess threat levels, and identify alternative transportation options.
Partner Contingency Planning
- Maintain regular communication and strategic planning with key trade partners.
- Develop alternative supplier and partner relationships before disruptions occur.
For businesses with global operations and supply chains, geopolitical instability will remain a business risk. But companies that are vigilant about reviewing policy coverage, understanding triggers, and strengthening coverage practices can reduce the likelihood and impact of unexpected coverage gaps and improve their resilience against uninsured losses.
Footnotes:
1: Reuters, “AerCap can recover over $1 bln, UK court rules in case over jets ’lost’ in Russia” (June 11, 2025).
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August 25, 2026
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