Despite mounting loss activity, rising social inflation and geopolitical volatility, the energy insurance market remains deeply soft, with abundant capacity, intense competition and continued downward pressure on rates, according to the Energy Market Review published today by Willis, a WTW business (NASDAQ: WTW).
Upstream capacity has reached record levels of over $10 billion with further growth expected from new market entrants and broker facilities. Loss activity, capital reallocation and macroeconomic volatility have the potential to stem the softening cycle in the immediate term. However, there is no single structural catalyst in sight to drive a meaningful turn in pricing.
The downstream market saw gross losses of $6.8 billion in 2025, with further deterioration from losses toward the end of 2025 and early 2026. Despite the loss heavy backdrop, the market continues to attract new entrants, in both MGA platforms and traditional Lloyd’s markets, keeping high levels of capacity available and ongoing competition, even as losses escalate.
Whilst international liability markets remain a broadly profitable class with healthy capacity, the spread of global litigation, insufficient reserving and the increase in liability over and above normal inflation levels remain key concerns. Despite these underlying concerns, capacity and competition are acting to sustain a liability market that is beneficial to buyers and shows no sign of hardening in the immediate future.
Recent geopolitical tensions in the Middle East have inevitably heightened focus on exposures. It remains to be seen whether the ongoing conflict in the Middle East will generate any significant losses across the operational energy insurance market.
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.”
Marie Reiter, Global Head of Broking Strategy, Natural Resources, Willis added: “Risk quality and strategic engagement matter more than ever. Clear risk data, flexible placement structures and strong broker-to-market relationships remain essential differentiators to create resilience and stability for energy companies in readiness to withstand unexpected shocks and future upturns in the market environment.”