2011-05-24
By staff reporter
Despite an unprecedented number of recent natural catastrophes, conditions remain favourable for most energy insurance buyers, according to Marsh.
Negotiations for many buyers have become more difficult, as underwriters show greater price discipline and request more data from insureds, and rates have risen for some segments of the market. However, most buyers continue to benefit from strong capacity and excess capital, according to Marsh’s latest Energy Market Monitor.
“While conditions have become more challenging following recent natural catastrophes in Japan, New Zealand, and elsewhere, capacity and capital remain strong for energy insurers, meaning that this remains a buyer’s market,” said Jim Pierce, global chairman of Marsh’s energy practice. “Even with modest rate increases in some segments, Marsh expects conditions to remain favourable for the remainder of 2011, barring an unforeseen market-changing event.”
Primary energy insurance markets have suffered relatively few direct losses as a result of recent sizable earthquakes in Japan and New Zealand, according to Marsh’s report. However, reinsurance market losses could impact primary insurance rates in the future.
The Middle East and North Africa remains an attractive market for underwriters, driven largely by an absence of natural catastrophe losses, though concerns remain about continued political unrest in the region.
Notable exceptions to the mostly favourable insurance market conditions include:
•Deep water drilling and control of well, where capacity is strained; and
•Excess casualty in the United States, following the departure of several underwriters in the wake of the Deepwater Horizon loss and other recent events
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