The Lloyd's of London insurance market expects losses of £1.4bn in the Gulf region from the US-Iran war, according to chief executive Patrick Tiernan. Despite ongoing strikes on ships in the Strait of Hormuz, losses stem mostly from damage to infrastructure on land, triggering large claims under political violence and terrorism policies. Iran has used drones and missiles to attack energy plants and other critical infrastructure in the region since the US and Israel attacked Tehran at the end of February.

The £1.4bn represents about a quarter of Lloyd's losses to date from the war in Ukraine since Russia's full-scale invasion in 2022. Saudi chemicals giant Sabic is expected to make an $800mn claim on a political violence insurance policy after a missile strike damaged a petrochemical complex. The war-related losses come despite a relatively mild half-year period for Lloyd's insurers, without any of the large-scale natural disasters that typically trigger the biggest losses at the market.

But the market's combined profit before tax fell almost a fifth to £3.5bn owing to investment losses. Commercial insurance prices are tumbling because of an influx of private capital into the sector as well as relatively few large losses from extreme weather.