Even before this year’s hurricanes, we predicted that the substantial rate reductions seen in recent years were likely to come to an end in 2017.
Yet, Hurricanes Harvey, Irma and Maria appear to be a catalyst for a wider change in the energy market.
Since these three storms struck in August and September, upstream and downstream energy accounts have renewed with increases of between 0 per cent and 10 per cent.
Reinsurance renewals in January could have a further bearing on the market – underwriting margins are such that energy insurers are likely to pass on any expected increase in reinsurance costs to their clients.
US windstorm exposed accounts, in particular, will see increases when they renew ahead of next year’s hurricane season.
The market for Gulf of Mexico wind cover is relatively tight in terms of supply, while underwriters more generally view catastrophe risks as underpriced.
Globally, however, the energy market continues to be characterised by ample capacity and competition, a situation that may well act as a dampener on significant price increases.
Energy tips for buyers
The price increases sought by energy insurers should be considered in context and with the value of long-term relationships in mind.
Insureds would do well to investigate captives and industry mutual as a way to gain leverage in negotiations with the commercial market.
For further information please contact John Cooper, Technical Managing Director on +44 20 7466 6510 or email email@example.com