Diketseng Maleke|published
The escalating conflict between the US, Iran and Israel highlights the impact geopolitical instability has on global trade and, by extension, South African businesses. Insurance Cover, says Rhino de Kock, head of distribution at PSG Insure.
According to De Kock, geopolitical conflicts have a direct impact on how insurers assess risk, particularly where trade routes, sanctions and war-related risk exposures are concerned.
“All insurers include war clause exclusions in their policies for acts of war such as invasion, military action, insurrection and terrorism. These exclusions exist because war-related losses can be devastating on a large scale and threaten the long-term financial viability of insurers,” says De Kock.
according to centum 2025 Insurance Barometer ReportSurveyed 881 South African consumers, corporates and intermediaries Insurers are increasingly adapting to interconnected risks including geopolitical instability, sanctions and global trade disruptions. The report confirms that businesses and families are facing a more complex risk environment, where global conflicts are directly shaping local insurance practices and costs.
De Kock points out that these exclusions are often ignored during periods of relative global stability, but they become critically important when conflict escalates and attracts multiple state actors, as is currently the case in the Middle East. War and exclusion clauses are a standard feature in most commercial insurance policies and are designed to exclude financial losses arising directly or indirectly from war or war-like events and acts of instability.
However, De Kock says that in the context of the current conflict, insurers may want to re-evaluate the risk associated with affected areas, major shipping routes and airspace. “Once a conflict reaches a certain level of intensity or geographical spread, insurers may withdraw or restrict cover in those areas. This could leave businesses exposed where they believe cover remains in place, particularly for cargo, marine and transit risks,” he says.
South African businesses involved in the import or export of goods are most vulnerable to financial losses. Increased military activity in some areas could increase the risk of disruption to major shipping lanes, airports, ports and logistics centres, which could impact existing maritime insurance arrangements.
De Kock warned that businesses trading through or near conflict-affected areas may find that war cover is canceled or significantly restricted, increasing the risk of loss or damage in transit. “Where the war boycott applies, losses can no longer be considered unforeseeable,” he explains. “This means that claims relating to conflict-induced incidents may be rejected, even if the damage occurred far from South Africa.”
Beyond physical risk, international sanctions play a major role in shaping insurance responses to geopolitical conflict. De Kock points out that most policies contain sanction limitations and exclusion clauses, which prevent insurers from providing cover or paying claims if doing so would violate sanctions imposed by bodies such as the United Nations or allied jurisdictions. “Sanctions are a major concern in the conflict involving the US and Iran,” he says. “If a claim payment or policy risk puts an insurer in breach of international sanctions, they are legally prohibited from responding.”
This is particularly relevant where restrictions are imposed after the shipment has commenced. In such cases, even legitimate claims may not be payable if the settlement violates sanction rules. The ongoing conflict is not only affecting trade and supply chains, but it may also have an impact on travel insurance, with many South African travelers reportedly stranded abroad. According to De Kock, it comes down to the same principle that applies to commercial insurance: war is almost always excluded.
“Most standard travel insurance policies include extensive war and conflict exclusions. This means that cancellations, delays, re-routing and additional accommodation costs arising directly or indirectly from acts of war or military action are usually not covered,” he says.
He explains that many travelers assume that travel insurance will respond to any unexpected disruption, but geopolitical conflict is treated very differently from operational delays or weather-related events.
“When airspace is closed, flights are grounded, or borders are affected due to military conflict, insurers view it as a systemic war risk rather than an individual, force majeure event. As a result, travelers may find themselves responsible for additional costs such as new flights, extended accommodations, or alternative transportation,” he says.
De Kock urges both South African businesses and international risk-averse travelers to carefully review their insurance arrangements and proactively engage with their advisors.
He says, “Insurance should not be treated as a static product, especially in a rapidly changing geopolitical environment. Understanding how war exclusions, embargo clauses and territorial limitations apply is key to proactively managing risk.”
He says informed planning and early engagement can help reduce uncertainty and prevent unexpected gaps in cover.
“In times of rising global stress, insurance remains an important risk management tool. But it only works effectively if policyholders understand its limitations as well as its protections,” says De Kock.
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