Energy Market Review 2025
Stepping into the liability insurance market in 2025 is somewhat like navigating through conflicting currents in open water. Just as tide times and beach locations create varying sea conditions, differing domiciles and energy sectors yield diverse liability renewal outcomes.
Following a sustained period of unprofitability, the casualty sector has now had a consistent run of three years of underwriting profit.[1]
| Year | Gross written premium £m | Combined ratio % | Underwriting result £m |
|---|---|---|---|
| 2014 | 4,959 | 98.1 | 74 |
| 2015 | 5,764 | 100.1 | (5) |
| 2016 | 7,131 | 102.7 | (146) |
| 2017 | 8,464 | 103.1 | (189) |
| 2018 | 9,094 | 102.9 | (183) |
| 2019 | 9,459 | 105.7 | (390) |
| 2020 | 9,067 | 110.3 | (688) |
| 2021 | 10,360 | 100.3 | (17) |
| 2022 | 12,987 | 93.7 | 536 |
| 2023 | 12,991 | 93.6 | 576 |
| 2024 | 13,403 | 95.5 | 890 |
Global capacity has remained broadly stable, but underlying changes are significant. Major insurers are reducing line sizes with a number constricting from $100 million to $75 million or from $75 million to $50 million, while Bermuda market excess liability insurers are trimming their lines to limit exposure. Conversely, international liability insurers with smaller capacities are increasing their line sizes, providing greater competition and capacity for energy companies with low limit requirements.
Despite caution from major global insurers, regional market capacity is expanding, particularly in Australia, the Middle and Far East, and Latin America. Competitive local pricing and the need to meet premium income targets are driving fair and realistic renewal pricing on international business.
Insureds will experience differing renewal outcomes based on their liability exposures:
Social inflation, defined as an increase in liability compensation costs above general economic inflation, is a growing concern. In the U.S., litigation costs have driven up liability claims by over 57% in the past decade.[2] The phenomenon of “thermonuclear verdicts” (claims in excess of $100 million) is becoming more common, with 27 such claims in 2023 alone.[3] This trend is also spreading to Europe, Australia and Canada.
The North American energy casualty market faces varying conditions across different sectors. Primary liability remains stable, but challenges persist in the oilfield services segment. Excess liability remains stable for most segments, though capacity within the first $25 million is cautious due to lawsuit abuse issues.
Current market conditions are creating a riptide effect on the global liability marketplace, with pressures flowing in different directions. Sometimes contradictory, sometimes concurrently, sometimes overlapping. In the same way that tide times and beach locations can create differing sea conditions, differing domiciles and energy sectors will yield very different liability renewal outcomes.
Contact our liability team to find out how your company can sail through potentially choppy currents in 2025.
| Title | File Type | File Size |
|---|---|---|
| Energy Market Review 2025 | 6.2 MB |
