The global energy insurance market continues to show soft conditions despite increasing losses and a more uncertain operating environment, according to a newly published Energy Market Review by Willis, a WTW business.
The report indicates that high levels of available capacity and sustained competition are continuing to outweigh the impact of rising claims, social inflation and geopolitical developments, resulting in ongoing pressure on pricing.
In the upstream segment, capacity has surpassed $10 billion, reaching an all-time high. Additional growth is anticipated as new insurers enter the market and broker-led facilities expand.
While recent loss activity, shifts in capital allocation and macroeconomic volatility may moderate the pace of softening in the near term, the report notes the absence of a clear structural driver that would lead to a significant or sustained increase in rates.
The downstream market recorded approximately $6.8 billion in gross losses during 2025, with further adverse development linked to claims emerging toward the end of the year and into early 2026. Despite this, the sector continues to attract new participants, including managing general agents (MGAs) and established Lloyd’s market carriers. This has helped maintain elevated capacity levels and competitive conditions, even as losses increase.
Liability lines remain broadly profitable on an international basis and continue to benefit from sufficient capacity. However, the report highlights concerns around the expansion of global litigation, potential under-reserving and liability costs rising faster than standard inflation. Even so, these factors have not yet led to a tightening of market conditions, with competition continuing to support buyer-friendly outcomes.
Geopolitical tensions in the Middle East have brought increased attention to potential exposures within the energy sector. According to the report, it is not yet clear whether ongoing developments in the region will result in material insured losses for the operational energy market.
Rupert Mackenzie, Global Head of Natural Resources at Willis, commented: “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, said: “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.”
