The global energy insurance market is marked by a “striking contradiction”, with rising losses failing to disrupt a prolonged soft cycle, according to the latest Energy Market Review from Willis.

Despite mounting loss activity, social inflation and geopolitical volatility, conditions have remained favourable to buyers, driven by abundant capacity and strong competition. The report highlights a disconnect between pricing and underlying risk, with no clear catalyst for a market turn.

Upstream capacity has reached record levels of over US$10bn, while downstream losses reached US$6.8bn in 2025, with further deterioration into early 2026. Even so, new entrants across MGA platforms and Lloyd’s markets are sustaining high capacity levels.

Liability lines remain broadly profitable, though concerns persist around litigation trends and reserving. Competitive pressures continue to prevent any near-term hardening.

Geopolitical tensions in the Middle East are increasing scrutiny of exposures, though it remains unclear whether these will result in significant insured losses.

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.”

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