Rate softening has further accelerated in most sectors of the energy market and shows no signs of abating. Insurance buyers remain in a strong position to optimize both cost and coverage as we move into 2026.
Insurers continue to battle between writing profitable portfolios and achieving the growth targets they have been set–a balance that is getting harder to strike. We may well see more insurer merger and acquisition activity going forward as markets try to inorganically grow their books.
The upstream energy market has experienced another record year of low loss activity, potentially pointing at the establishment of a new baseline driven by improved risk management and asset quality. Downstream insurers, on the other hand, have suffered in the region of $3.5 billion of losses so far with claims already equaling market premium. While downstream leaders are addressing this loss activity on the most affected accounts and portions of their portfolio, market appetite for the remainder of placements grows further and rates continue to soften. There is still a little way to go before rates reach the absolute bottom of the cycle; we will know we are closer to this when markets start offering concessions on typical coverage restrictions and show a willingness to consider reduced retentions and waiting periods.
This raises questions around how much longer this softening cycle will persist before the market turns. Management will be keeping a watchful eye on the sustainability of reduced premiums as competitive pressures and growth targets potentially intensify in the year ahead.
Brokers are often accused of portraying large reductions achieved on tendered placements under significant competition, as the new market norm. While extreme reductions are likely to be outliers, the market is moving in a direction: down. Although sizable reductions are not the norm across the entire portfolio of energy risks, it is incumbent upon brokers to push the market hard to achieve the best possible placement outcomes for our clients by creating appetite, competition and scarcity.
Similarly, it is underwriters’ responsibility to steady the tide of rate reductions to maintain profitability. To this end, ’underwriter talk’ frequently presents a picture of much lower average reductions across their book of business. However, these figures include outliers at the other end of the spectrum such as loss-bearing accounts and small placements with less favored risk profiles and, most importantly, they do not include new business which the insurer did not write in the previous year. It is the latter that often attracts the largest reductions. Without accounting for the full picture, average figures can be disproportionately low.
It is safe to say that the realistic picture for most clients lies somewhere in the middle of these opposing views. It’s the role of the broker to advocate for their client and reach a point at which all parties can agree and move forward with confidence.
In the current market, brokers have a number of strategies they can deploy to optimize renewal terms for their clients:
Energy companies renewing for the remainder of 2025 are in a strong position in the softening market showing no signs of abating. Favorable reinsurance treaty renewals across all sectors of the energy market will allow insurers to further prolong the softening trend by alleviating some of the cost pressures. These savings could allow insurers to hold the fine balance of profitability versus growth ambitions for a little while longer, allowing buyers to reap the benefits of sustained compounding rate reductions into 2026.
We hope that you find the Review to be insightful and look forward to discussing any of these topics with you in more detail.
Download the full report to explore the complex and evolving challenges facing upstream, downstream and liability markets.
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While the downstream energy insurance market remains soft, signs of tempered reductions and strategic repositioning are emerging as we approach 2026.
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The upstream energy insurance market has continued to soften since the April Energy Market Review (EMR).
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For international markets, conditions are becoming more favorable, with undercurrents from claims and social inflation in the U.S. tempering meaningful softening globally.
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In this piece we deep dive into the North America PDBI and casualty markets to see how they are fairing in this time of uncertainty.
| Title | File Type | File Size |
|---|---|---|
| Energy Market Review Update 2025 | 5.8 MB |
