Rate softening in the energy market shows no signs of abating, according to Willis
Rhea-AI Summary
Willis (NASDAQ:WTW) says energy insurance market softening continued into 2026, with upstream classes delivering insurer profitability after another year of low loss activity and downstream experiencing around US$3.5 billion of losses so far this cycle.
Report notes insurer appetite and capacity oversupply are driving standard rate reductions of 10–15% and competitive tenders showing 20–50% cuts. Six of eight major losses this year occurred in the US, pressuring US-exposed clients. Trends to watch for 2026 include subsea capacity restrictions, upstream construction placement strategies, reinsurer top-up layer behaviour, and liability risks from US social inflation and new European class-action rules.
Positive
- Upstream underwriting shows continued profitability after low loss activity
- Observed standard premium reductions of 10–15%
- Competitive tenders showing premium cuts up to 20–50%
Negative
- Downstream losses total approximately US$3.5 billion this cycle
- Six of eight major losses this year occurred in the US
- Subsea construction capacity remains restricted, creating a micro-hard market
- US social inflation and nuclear verdicts are tightening casualty exposures
News Market Reaction – WTW
In the Nov 13 session, WTW gained 1.33%, reflecting a mild positive market reaction.
Data tracked by StockTitan Argus on the day of publication.
AI-generated analysis. How Rhea-AI works. Not financial advice.
LONDON, Nov. 13, 2025 (GLOBE NEWSWIRE) -- Insurance buyers remain in a strong position to optimise both cost and coverage as the market moves into 2026, according to the Energy Market Review Update published today by Willis, a WTW business (NASDAQ:WTW).
After experiencing another record year of low loss activity, attributed to improved baseline levels in risk management and asset quality, the upstream energy market continues to deliver profitability for insurers. Market softening has accelerated even further for the class since the previous Energy Market Review was published in April, with long-term relationships being rewarded as insurers prioritise retention of well-managed risks.
Downstream insurers, on the other hand, have suffered around US
The report outlines some of the trends Willis will be watching in 2026:
- Upstream construction: long-tail risks remain a perennial challenge, but underwriters are more accommodating of these less favored risks where an operational relationship already exists. Leaning on operational relationships to bolster a construction placement is becoming a key strategy.
- Subsea construction: capacity remains restricted for subsea construction, creating a micro-hard market. In a soft market where winning new business is a key focus, some are considering writing small amounts of subsea construction to boost much-needed premium income.
- Upstream reinsurance treaty renewals: if insurers continue to purchase high-level top-up layers on capacity assets, this will provide an indication of their future strategic direction in maintaining and growing market share versus adjusting budget expectations downward for 2026.
- Liability market: Healthy capacity and generally positive loss ratios have helped to positively impact conditions and move the international market from a hard to a softening rating environment, in strong contrast to conditions in the US casualty market. Social inflation and nuclear verdicts in the US continue to drive reductions in lines and programs with exposure. In Europe, insurers are increasingly concerned about new legislation making it easier to bring a class action, which could lead to a material knock-on effect on liability claims costs.
Rupert Mackenzie, global head of natural resources at Willis, said: “Insurers have reported strong financial results at the end of Q3. The ongoing oversupply in capacity and insurer appetite for growth is simplifying previously complex verticalised placement structures, yielding premium savings for clients. This means that energy companies renewing in Q4 2025 and looking forward into 2026 are in a strong position, with room to negotiate conditions in addition to price.”
The complete report can be downloaded here.
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