The global energy insurance market continues to weaken despite mounting losses and a more uncertain operating environment, according to the latest Energy Market Review from WTW firm Willis.
The report noted that high levels of available capacity and continued competition continue to outweigh the impact of rising claims, social inflation and geopolitical developments, resulting in continued pressure on pricing.
In the upstream sector, production capacity has exceeded US$10 billion, reaching a record high. Additional growth is expected as new insurance companies enter the market and broker-led facility expansions occur.
While recent loss activity, changes in capital allocation and macroeconomic volatility may slow the pace of economic weakness in the near term, the report noted the lack of clear structural drivers for a significant or sustained rise in interest rates.
The downstream market recorded total losses of approximately USD 6.8 billion in 2025, with further adverse developments related to claims arising towards the end of the year and early 2026. Nonetheless, the industry continues to attract new players, including managing general agents (MGAs) and established Lloyd’s market carriers. This helps maintain higher capacity levels and competitive conditions even as losses increase.
Liability insurance remains generally profitable internationally and continues to benefit from ample capacity. However, the report highlighted concerns about expanding global litigation, potential shortfalls in provisioning and liability costs rising faster than standard inflation. Even so, these factors have yet to cause market conditions to tighten, with competition continuing to support buyer-friendly results.
Geopolitical tensions in the Middle East have drawn increased attention to potential risks in the energy industry. It is unclear whether continued development in the area will result in significant insured losses in operating energy markets, the report said.
Rupert Mackenzie, global head of natural resources at Willis, commented: “The energy insurance market remains very favorable for buyers as 2026 progresses. Worsening loss trends, whether from severe losses at downstream refineries, upstream construction tailings or liability claims inflation, have yet to drive corrective hardening.
“The severity of losses remains insufficient to offset the broader industry’s oversupply of capital, arguably decoupling pricing from underlying risks. As commodity price volatility is likely to be an ongoing issue into the next quarter, we urge buyers to review their business interruption statements to ensure they are able to fully recover in the event of an event.”
Marie Reiter, global head of brokerage strategy at Willis Natural Resources, said: “Risk quality and strategic engagement are more important than ever. Clear risk data, flexible placement structures and strong broker-to-market relationships remain important differentiators that can create resilience and stability for energy companies to weather unexpected shocks in market conditions and future upturns.”
