At its annual conference in Singapore, the International Union of Marine Insurance (IUMI) reported a shift in the global offshore energy insurance landscape. Premiums for the sector declined in 2024, totalling USD4.34 billion, representing a 7.9% decrease compared with the previous year.
The reduction was most pronounced in the European market, while Japan, Malaysia, and Egypt reported stable-to-downward trends. Norway, however, stood out with a significant 27% increase in premiums.
The overall contraction in premiums has been attributed to several factors including depressed oil prices, competitive pressures and growing market capacity.
The claims environment painted a mixed picture. On a positive note, 2024 recorded very few large losses and no catastrophic events, demonstrating improved operational safety across the sector. However, attritional losses remained high, with an estimated USD 2 billion reported for the year – posing a challenge to profitability, especially in the event of a major loss. Utilisation levels are currently high at around 80%, yet retentions and deductibles have remained largely unchanged, creating potential vulnerabilities.
Melanie Raven, Chair of IUMI’s Offshore Energy Committee, expressed a note of caution:
“We are seeing a reduction in overall premium levels, combined with increased market capacity. Profitability across the sector is under pressure. With attritional losses already running high, we must remain mindful of our exposure should a significant event occur.”
Ms Raven also highlighted a key structural shift within the industry:
“Offshore energy underwriting is inherently technical, but in recent years we’ve seen more commercial practices such as auto-buying and smart follow facilities entering the space. While innovation is welcome, our market must not lose the deep technical expertise that enables us to provide robust cover at sustainable pricing levels.”
Despite the challenges, there are reasons for optimism. Ms Raven pointed to accelerating investment in offshore renewables, particularly the rapid construction of offshore wind farms in Asia. The growing role of gas as a transitional energy source is also creating new opportunities.
“For traditional energy underwriters, the barriers to entering the green energy space are relatively low, and this is proving a positive development for many insurers,” she noted.
Finally, safety improvements continue to bolster confidence in the sector. The absence of large or catastrophic losses underscores the increased resilience of offshore operations, supported by ongoing investment from oil and gas companies.
Source: IUMI