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Survey Report

Insurance Marketplace Realities 2020 Spring update – Energy

COVID 19 Coronavirus

May 7, 2020

For downstream energy, market conditions are increasingly challenging, while the upstream market continues to buck the overall current trend.
Rate predictions
  Trend Range
Increase (Purple triangle pointing up) +30% to +40%
LNG plants and midstream assets
Increase (Purple triangle pointing up) +20% to +30%
Increase (Purple triangle pointing up) +2.5 to +10%

Key takeaway


The provision of detailed, accurate business interruption (BI) values will limit the rating upswing facing buyers.


Detailed and informative underwriting submissions remain vital for the best deals.


Market conditions are increasingly challenging.

  • Overall capacity is down $0.5B, roughly $6B from just under $6.5B in 2019, as the loss record remains poor.
  • Management pressure on underwriters to raise rates and reduce line size — mainly mostly the former — is as intense as ever.
  • Carriers are moving toward greater centralization of underwriting authority.

Buyers who have maintained their insurer relationships have an advantage.

  • Loyalty is being rewarded with less punitive terms.
  • Disloyal customers are being penalized, indicating further disadvantages of price-driven strategies.
  • Tendering programs in search of new partners can be challenging in a hardening market.

We are seeing increased focus on business interruption values.

  • Insurers are paying losses based on different sets of figures than those presented at inception.
  • Insurers now favor an annual cap of approximately 110% of inception values and a monthly cap of 125%.
  • Insureds should endeavor to forecast more accurate numbers at program inception to avoid coverage disputes and possible underinsurance at the time of loss.


The upstream market continues to buck the overall current trend.

  • Abundant capacity and benign loss levels offset carrier management pressure to raise rates.
  • Market conditions might be softening in the absence of this management pressure.
  • Insurers are augmenting their portfolios with midstream business won from the downstream market.

The upstream premium income pool is still depleted, indicating that market conditions could change.

  • Overall premium income levels remain low by historical standards.
  • Upstream premium income has fallen $2B in last nine years.
  • A small number of major losses could shift existing market dynamics.

Offshore construction is the exception to the rule.

  • Losses far outweigh the relatively small premium income pool.
  • Subsea issues drive underwriting losses.
  • Some market leaders are sensing an opportunity as rates rise significantly.


Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates. COVID-19 is a rapidly evolving situation and changes are occurring frequently. Willis Towers Watson does not undertake to update the information included herein after the date of publication. Accordingly, readers should be aware that certain content may have changed since the date of this publication. Please reach out to the author or your Willis Towers Watson contact for more information.

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