Asia’s energy sector benefits from soft insurance market: Willis

Insurers also continue to provide strong capacity with new and expanded offerings.

The global energy insurance market is continuing to soften, driven by strong competition and record-high capacity, according to the Energy Market Review released by Willis. 

This trend is creating a favourable environment for energy companies in Asia as of the first quarter of 2025.

In the downstream segment, rate reductions are accelerating due to a relatively benign loss record in 2024. 

However, early 2025 has already seen potential losses totaling $1.5b, surpassing the total for all of 2024. 

Whilst current conditions remain favourable, such loss activity could influence the pace and extent of further softening later in the year. 

Energy companies that focus on rate optimisation are well-positioned to benefit from increased competition amongst insurers seeking high-quality accounts.

Asian-based insurers continue to provide strong capacity, with new and expanded offerings entering the market over the past two years, largely driven by improved profitability in the downstream sector. 
At the same time, insurers from other regional hubs, including the Middle East and London, are seeking greater exposure to Asian business, intensifying competition and putting pressure on incumbent insurers to offer competitive renewal terms.

In the upstream sector, capacity has grown by approximately 5% following a quiet year for losses, contributing to the continued softening of the market. 

Underwriters are increasingly willing to take on leadership roles, further driving pricing down.

Despite a historically poor performance in the construction segment, many insurers have already filled their 2025 budget in this area, reflecting the appetite for growth and market share.

Charlotte Watts, Head of Energy, Asia at Willis, noted that conditions in the upstream sector vary widely due to the diverse nature of risks, including operational, construction, subsea, and geothermal. 

She cautioned that although the soft market is expected to persist, a string of large losses could quickly alter risk appetite. 

Watts emphasised that energy companies with strong insurer relationships and robust risk management practices are likely to secure the most favourable terms.

Watts added that 2025 is a critical year for energy transition, with companies needing to balance short-term fossil fuel investments with long-term decarbonisation goals.