W&I Insurance in the Middle East Amid Heightened Geopolitical Risk

1. W&I in the Region Today

Warranty and indemnity (W&I) insurance has come a long way in the Middle East and Africa. A few years ago, it was the preserve of a handful of cross-border deals and private equity transactions where international buyers insisted on it. Today, it sits at the center of how transactions are structured and negotiated across the region, and that shift has happened faster than most people anticipated.

The change reflects a genuine maturing of the deal environment. Founders selling businesses for the first time, family groups exiting long-held assets, and strategic buyers seeking clean acquisitions are all now engaging with W&I insurance as a standard part of the process rather than an afterthought. The increasing presence of international insurers and brokers operating locally, alongside the continued development of legal infrastructure, particularly in the United Arab Emirates (UAE) and Saudi Arabia, has made the product more accessible and more credible.

In competitive sale processes, the dynamic has shifted meaningfully. Sellers increasingly expect to walk away with limited or no postclosing liability. Buyers, in turn, routinely rely on W&I-backed recourse to underpin their bids, and what was once a differentiator has become table stakes. That normalization is, in itself, a sign of how far the regional market has matured.

2. What Has Changed in the Current Market

W&I insurance has proven resilient during the current geopolitical environment. The product remains available, and for well-prepared transactions with robust diligence, transparent financials, and a clear investment thesis, there is still strong appetite from insurers. 

That said, the market is operating differently. A minority of insurers has paused underwriting activity in the region, while the majority that remain active is applying greater selectivity. Transactions with meaningful exposure to areas of active conflict, complex cross-border dependencies, or evolving regulatory frameworks are receiving more detailed scrutiny. For example, an infrastructure target that depends on equipment sourced through a regional logistics corridor affected by conflict may face more detailed questions on supply chain continuity, alternative sourcing arrangements, and whether any potential disruption has been reflected in the valuation or transaction structure. Further, exclusions around war, conflict, and civil unrest are now being implemented across the insurer spectrum. We consider the application of the exclusion to be uncontroversial and immaterial in the context of policy coverage as a whole. 

The shift in underwriting philosophy is perhaps the most significant change. Underwriting has become less of a tick-the-box exercise and more of a substantive assessment of the risk being insured. Insurers are focusing closely on what that diligence has shown, how identified issues have been addressed, whether the disclosure record is clear and whether the deal rationale remains coherent in light of the current geopolitical environment. For deal teams, this means that the quality of preparation — the scope and rigor of diligence, the clarity of risk disclosure, and the coherence of the deal rationale — matters more than it did previously. Transactions that are well packaged are still moving efficiently.

Further, note that insurers have no appetite to underwrite exposure to sanctioned jurisdictions such as Iran, and Iraq remains effectively off-limits for most insurers regardless of the current conflict. Lebanon has historically been more challenging, although not necessarily impossible depending on the facts. For multijurisdictional transactions, insurers may apply a specific exclusion for Iraqi operations or other higher-risk exposures. In practice, this has affected only a limited number of regional transactions, but it is an issue that should be identified early.

3. What Underwriters Are Focusing On

The W&I process in the Middle East is broadly consistent with the process followed across the world, typically using English-law style policies and a familiar due diligence and Q&A-based underwriting approach. However, over the past few months, underwriting processes in the Middle East have become noticeably more granular. The recent change is not that the region has moved to an entirely different model but that underwriters are now applying the same core disciplines with greater depth and sensitivity to regional geopolitical risk. Insurers are asking harder questions earlier in the process, and the areas of focus reflect the specific fault lines of the current environment.

Direct and indirect exposure to regional tensions

Underwriters are looking carefully at whether the target has operations, customers, suppliers, or assets in areas affected by ongoing conflict or political instability. Indirect exposure, through counterparties, regional distribution networks, or financial flows, is being examined with the same rigor as direct presence. The question is not just where the business operates today but how its dependencies would hold up under continued or escalating pressure.

High-growth and strategic sectors

Sectors driving deal activity in the region, namely deals in healthcare, education, data centers, and AI-related infrastructure, remain highly attractive to insurers. But they are not immune to geopolitical dynamics, whether through energy supply considerations, cross-border data regulation, or concentration of capital deployment. Underwriting in these areas is often more detailed, and in some cases more cautious, than the deal team might expect given the sector's headline growth story.

Supply chain resilience and operational continuity

Given the region's role as a global logistics hub, supply chain analysis has become a central theme in underwriting conversations. Insurers are assessing supplier concentration, reliance on specific jurisdictions or transport corridors, and the credibility of contingency planning. Businesses that can demonstrate genuine resilience in their operations rather than theoretical flexibility are in a stronger position.

Sanctions and regulatory exposure

Sanctions and broader regulatory compliance remain key areas of scrutiny, particularly in cross-border transactions. Underwriters are focused on the adequacy of the compliance controls in place and on any indirect exposure through customers, intermediaries, or ownership structures. This is an area where thorough diligence and clear documentation make a material difference to insurer comfort.

Alignment between risk and valuation

Perhaps the most commercially significant shift is the growing expectation that identified risks are reflected in the transaction through valuation, pricing, or structural protections. Where material exposure exists and has not been addressed, insurers are increasingly reluctant to simply absorb it through the policy. The message to deal teams is clear: W&I is not a substitute for dealing with risk; it works best alongside a transaction that has been honestly priced. Much like W&I policies in other markets, cover is designed principally for unknown breaches of insured warranties in areas that have been properly subject to due diligence. It is not intended to insure known issues or fill gaps where diligence has not been done.

4. Insurer Sentiment and Market Appetite

The W&I insurers who support the Middle East market are, for the most part, London-based. Lloyd’s syndicates and specialist London market carriers have long provided the majority of capacity for transactions in the region, and that remains the case today. Over the last 18 months, however, there has been a notable increase in on-the-ground presence. In our view, what is noticeable not only to brokers but also to clients based in the region is the commitment shown by those insurers who have chosen to establish a physical presence in the Middle East. Being on the ground is not simply a commercial statement. It reflects a genuine conviction that the Middle East is a market worth investing in for the long term, not just accessing opportunistically from London when conditions are favorable. These insurers bring a different quality of engagement: They understand the local deal environment, they have relationships with the advisory community, and they are able to respond with greater speed and context than a team underwriting the region remotely. In the current environment, that proximity matters. 

From a risk allocation perspective, the London market’s approach has become more precise. The broad, lightly negotiated exclusions that characterized the market at its most competitive point have given way to more carefully drafted carveouts, particularly around conflict, civil unrest, and sanctions exposure. Underwriters are spending more time understanding the specific nexus between the target and any areas of concern rather than applying blanket exclusions. That is, in practice, a more sophisticated approach, and for transactions where the exposure is real but manageable, it often produces a better outcome than a blanket exclusion would have done.

Sector appetite among the committed insurers remains strong. Technology, healthcare, digital infrastructure, and education continue to attract interest, and businesses in these sectors that present well, with clear diligence, transparent financials, and a coherent risk narrative are finding that the market is competitive. Insurers genuinely active in the region are not looking for reasons to decline deals; they are looking for well-structured transactions they can support.

The practical implication for deal teams is to be selective about who they approach and how. A submission that lands well with an insurer who knows the region and is committed to it will get a very different response than the same submission sent to an underwriter for whom the Middle East is a peripheral and unfamiliar market. Working with a broker who understands which insurers are genuinely engaged and has the relationships to place the transaction effectively has become more important, not less. 

5. Cyber Risk – More Important Now Than Ever

The cyberthreat environment facing businesses across the Middle East has intensified significantly in recent years, and the current geopolitical backdrop has accelerated that trend. As the conflict has evolved, cyber operations have increasingly been deployed alongside conventional military activity, with state-linked and -aligned actors targeting government systems, critical infrastructure, and private-sector networks across the region¹.  

According to the UAE Cyber Security Council, the UAE is now fending off around 800,000 cyberattacks every day². Saudi Arabia has seen a parallel theme: The kingdom experienced 88 ransomware incidents in 2024³ , and geopolitical tensions drove a 70% increase in DDoS — malicious attempts to disrupt a server, service, or network by overwhelming it with a flood of Internet traffic — attacks in the first half of the year alone⁴.  

Cyber is key business risk regardless of the sector you operate in. For merger-and-acquisition practitioners, this matters in a direct and practical way. Buyers acquiring a business in the region are also inheriting the target’s cyber posture, its vulnerabilities, exposure, and any incidents that may be ongoing or undisclosed. In 2025, the average cost of a data breach in the Middle East was US$7.2m⁵ , higher than the global average, emphasizing the need to conduct thorough cyber due diligence to identify potential cyber risk to the transaction. Postclosing discovery of a material breach is not a theoretical risk; it is a pattern that is becoming more common.

Technical cyber due diligence addresses this directly. A thorough assessment goes beyond asking a limited number of cybersecurity questions related to the target. It covers a comprehensive review of cyber risk across the target, both internally and externally, by reviewing policies, processes, and relevant certifications as well as examining the target’s actual environment, network architecture, security controls, and whether there is evidence of historical compromise that has not been detected or disclosed. Technical assessments are designed to identify whether a high-level cybersecurity program translates into genuine operational security. 

From a W&I perspective, the connection is equally clear. Warranty packages typically include warranties around data protection compliance, absence of material cyber breaches, and adequacy of security measures. Where those warranties are made without the benefit of technical diligence, the risk of a claim, and the difficulty of establishing what was known at signing, increases materially. In the current environment, with threat activity at the levels the region is now seeing, that is a risk neither buyers nor their insurers should be comfortable accepting.

6. How Sellers and Deal Teams Should Prepare 

From a legal and process perspective, preparation now needs to reflect not just a more cautious underwriting environment but a more volatile geopolitical one.

The legal workstream has a direct bearing on the quality of the W&I outcome. In a more cautious underwriting environment, insurers are not only asking whether diligence has been done; they are testing whether the legal record supports the risk allocation the parties are asking the insurer to underwrite. That means the diligence reports, disclosure materials, management Q&A, share purchase agreement (SPA) protections, and disclosures in the disclosure letter all need to tell a coherent story about what risks exist, how they have been assessed, and where they are intended to sit, including in respect of sanctions exposure, supply chain dependencies, cyber resilience, and any nexus — direct or indirect — to higher-risk jurisdictions.

Where a target has exposure to Middle East operations or counterparties, these issues need to be identified early and analyzed with greater granularity. For example, deal teams should expect more detailed scrutiny around sanctions compliance frameworks, historical dealings with Iranian or other sanctioned counterparties, reliance on regional infrastructure, and vulnerability to state-aligned cyber threats. A risk that is clearly diligenced, stress-tested against current geopolitical scenarios, and expressly allocated in the transaction documents is far more likely to be underwritten efficiently. By contrast, risks that emerge late, are addressed only at a high level, or are not clearly tied to current geopolitical developments are more likely to result in delays, enhanced underwriting queries, or specific exclusions.

From a seller perspective, this places greater emphasis on building a defensible and internally consistent record. The data room, vendor diligence, and management materials should not only identify key risks but demonstrate how those risks are being actively managed in a heightened threat environment. This may include evidence of sanctions controls, incident response planning, cybersecurity testing, and contingency planning for regional disruption. Generic or “boilerplate” disclosure is increasingly unlikely to satisfy underwriters where geopolitical risk is in play.

Buyers should also be careful not to treat W&I as a substitute for diligence or contractual risk allocation. W&I will likely not provide cover for historic known risks or areas that have not been subject to due diligence. If a material issue is identified, the parties should consider whether it is best addressed through price, a specific indemnity, a covenant, a closing condition, a targeted policy exclusion, or a combination of these tools. The key is to be clear about which known risks are being retained under the transaction documents.

Ultimately, transactions are more likely to proceed smoothly where legal advisers, brokers, and diligence providers are aligned early and where the underwriting process is supported by a clear, evidence-based narrative of how geopolitical risks have been identified, assessed, and allocated. 

7. Key Policy Terms to Watch

In the current market, the most important policy negotiation is around the scope of exclusions. War, terrorism, civil unrest, and sanctions exclusions are not new, but they are receiving closer attention and, in some cases, being drafted more expansively. Deal teams should focus less on the existence of the exclusion and more on its substance and the operative language used: what causal connection is required, what jurisdictions or counterparties are covered, and whether the exclusion applies only to known or specific risks or to a broader category of losses.

These distinctions can be material. An exclusion for losses arising from a target’s dealings with a specific sanctioned counterparty, or from disruption to a particular supply arrangement identified in diligence, may be a reasonable allocation of a known risk. By contrast, an exclusion for losses “arising out of or in connection with” regional conflict, sanctions, civil unrest, or supply chain disruption could have a much wider effect, particularly if those concepts are not clearly tied to the target’s actual risk profile. In that case, the buyer may find that meaningful parts of the warranty package are uninsured in precisely the areas where it expected protection.

Parties should also consider how excluded risks are dealt with in the SPA. If a matter is excluded from the policy because it is known or specifically identified, the question should be whether that risk is accepted by the buyer, reflected in price, addressed through a covenant or condition, or covered by a specific indemnity. It should not be left as an unintended gap between the seller’s limited liability position and the insurer’s exclusion.

The practical point is that policy exclusions should be tested against the diligence record and the transaction risk allocation. Where an exclusion tracks a real, identified exposure, it may be manageable. Where it is drafted by reference to broad geopolitical or sanctions concepts without a clear nexus to the target, it should be challenged, narrowed, or addressed elsewhere in the deal documents.

8. Looking Ahead

The W&I market in the Middle East is continuing to mature, albeit adjusting to a more complex environment. The structural forces that have driven W&I adoption across the region remain firmly in place: Deal volumes, cross-border investment flows, and the demand for clean exit solutions are not going away.

The near-term picture is one of greater discipline and more careful navigation. Transactions that are well prepared with robust diligence, clear risk disclosure, and a coherent deal rationale will continue to access the market efficiently. Those that arrive less prepared will find it harder and more expensive. 

The divergence in insurer behavior may persist for a period. Some capacity that has stepped back will likely return as conditions stabilise, but the underwriting habits formed during this period — more targeted exclusions, more detailed risk analysis, a closer look at how deals are constructed — are likely to stay. 

More broadly, the experience of the past few months has reinforced something important about W&I's role in the region: it works best not as a last-minute risk transfer mechanism but as a tool built into the architecture of the deal from the outset. Parties that approach it that way, engaging early, preparing thoroughly, and treating the insurance process as part of the deal process rather than an add-on, are finding that it continues to deliver, even in this environment.

W&I has become a genuine enabler of dealmaking in the Middle East. Its role is not diminishing. If anything, the complexity of the current environment is making it more valuable, not less.

We would like to thank the Aon team, Omer Mahdi, Ibrahim Halawi, and Balal Nadeem for their contribution to this article.

¹ https://www.weforum.org/stories/2026/03/middle-east-conflict-iran-us-cybersecurity-landscape/?utm. 

² https://gulfnews.com/uae/crime/uae-faces-800000cyberattacks-daily-despite-lull-1.500513370. 

³ https://socradar.io/wp-content/uploads/2024/12/SOCRadar-Saudi-Arabia-Threat-Landscape-Report-2024.pdf.

⁴ https://bluefire-redteam.com/gulf-countries-cybersecurity-crisis-comprehensive-analysis-of-digital-threats-regional-vulnerabilities-and-economic-impact-in-2024-2025/.

⁵ https://mea.newsroom.ibm.com/codb-me-findings-2025.