Rising losses in the global energy insurance market has failed to disrupt a prolonged soft cycle which was tagged “striking contradiction” according to the latest Energy Market Review by Willis.
The report noted that buyers have up and until now been isolated and this is buoyed by abundant capacity and strong competition. This contradiction plays out with mounting loss activity, social inflation and geopolitical volatility, conditions. The report highlights a disconnect between pricing and underlying risk, with no clear catalyst for a market turn. As stakeholders are keen and watching the geopolitical tensions in the Middle East as it relates to exposures, it remains unclear whether these will result in significant insured losses.
Upstream capacity has reached record levels of over US$10bn, while downstream losses reached US$6.8bn in 2025, with further deterioration into early 2026. Even so, new entrants across MGA platforms and Lloyd’s markets are sustaining high capacity levels.
Liability lines remain broadly profitable, though concerns persist around litigation trends and reserving. Competitive pressures continue to prevent any near-term hardening.
Rupert Mackenzie, global head of natural resources at Willis, said: “As 2026 progresses, the energy insurance market remains highly favourable for buyers. Deteriorating loss trends, whether from heavy downstream refinery losses, upstream construction tails or liability claims inflation have not yet driven corrective hardening.
“Loss severity remains insufficient to counteract broader industry capital oversupply, arguably leaving pricing disconnected from underlying risk. With commodity price volatility potentially an ongoing issue in the coming quarter, we would urge buyers to review their business interruption declarations to ensure they can make a full recovery should an event occur.”
