Willis’ Report Sees Energy Market ‘Softening’ - Il Broker.it

Willis’ Report Sees Energy Market ‘Softening’

Da Insurance Journal di sabato 28 settembre.
“Too much capacity chasing an insufficient amount of premium in both the downstream and upstream energy markets will cause a general softening of the energy market in the remainder of 2013,” according to to Willis latest Energy Market Review Newsletter.
“With tough premium income targets to meet, pressures on underwriter participation ‘signings’ have increased, with virtually all the major insurers intent on one objective – to maintain, and if possible enhance, their overall premium income from this class,” the report said. “In the absence of further major losses, these pressures will continue to force insurers to compete more vigorously in both markets for preferred business and thus we expect to see a softening of the market in the fourth quarter of 2013.
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“In the absence of another major loss along the same lines as Hurricane Sandy, which effectively acted as a brake on the overall softening process at the beginning of the year, there are excellent opportunities in the months ahead for upstream buyers to leverage their position more favorably with the market,” the report added.
Willis Energy report for the “downstream market” said: “Several significant potential losses in 2013 have provided insurers with the rationale to maintain the modest hardening that was becoming evident by mid-April for the majority of the downstream portfolio. However, with available capacity remaining significant, Willis Energy still detects competition for the best business.
“Regardless of the losses that are being reported, premium income targets still need to be met and insurers are focusing on preferred programs in order to do so. Most of these programs feature a wide spread of risk, a benign loss record and plentiful premium income in areas free of natural catastrophe risk.
“Competition for this business has therefore intensified, as insurers look to maintain their market share. Today, Willis Energy says it is finding that significant underwriter signings are not uncommon for these more attractive risks; whereas last year insurers held back from such programs until the eleventh hour in the hope of securing more attractive terms, today the reverse often seems to be the case.”
In the upstream market the report said: “The general softening dynamic is continuing to be tempered by the high capacity requirements for certain types of risk, where demand still exceeds supply. This is predominantly the case in respect of some major North Sea platforms and for the larger Construction “all risks” programs that have recently been introduced to the market.


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