Energy re/insurance market pricing faces further difficulties
Against a backdrop of a deteriorating rating environment, overcapacity and downturn in the industry, the energy insurance market continue to face its lowest rating environment in several decades, according to the latest quarterly Energy report from Lloyd & Partners.
According to the report price declines have persisted throughout the market and many underwriters are continuing to operate with combined ratios over 100 percent.
The cost reduction has been felt across the market, with both onshore and offshore premiums falling from approximately $6.5 billion to $3 billion over the past two years.
The report suggested that sector specialists in all classes are advocating locking in current pricing levels wherever possible.
Loss activity for upstream energy continued with only the only event of note in 2017 being the $75 million underground blowout offshore Australia.
The general rate reduction on incumbent led renewals has gone from single digits at January 1 to some double digits by the end of the quarter, the report stated.
However, one sector offsetting this trend is the Gulf of Mexico windstorm for shelf operators, with assets dropping, but not at the same rate at non-catastrophe business.
Despite a few big losses in the sector, the trend to underwrite these risk at lower prices continues, the report concludes.
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