Energy insurers report $2b in claims as rates continue falling

Due to increased capacity and competition, particularly in local and int’l markets.

The downstream energy insurance market recorded approximately $2b in insured losses during the first half of the year, driven by several large claims events, according to Howden. 

Despite the scale of these losses, overall market rates have continued to decline due to increased capacity and competition, particularly in local and international markets, Howden Specialty’s Energy Insurance Market report showed.

Stronger local capacity and a growing appetite for both domestic and global risks have placed pressure on reinsurers, who are being pushed to offer or support steep discounts to retain positions on oversubscribed international programmes. 

This has allowed clients greater flexibility in structuring insurance programs, with improved access to competitive terms, especially at the regional level.

Double-digit rate reductions are still being achieved for clean and well-managed risks. 

Even risks with a history of losses are seeing single-digit reductions in some cases—mainly because they fall within an underwriter’s core portfolio. 

Rates are also falling for risks exposed to natural catastrophes, supported by additional market capacity and treaty renewals concluded earlier in the year.

Long Term Agreements (LTAs) are gaining traction as market players seek stability amid volatility. 

Most insurers and reinsurers are open to LTAs, offering clients incentives in return for longer-term commitments.

Increased capacity in Q1, including from Canopius and Africa Specialty Risks, has added further competitive pressure in London and international markets. 

This has helped drive premiums lower as carriers look to secure more business.

Despite the downward trend in pricing, the downstream market remains exposed to the risk of high-severity losses. 

As a result, insurers are putting greater emphasis on risk selection, high-quality engineering data, and active broker-underwriter communication.