Upstream

At the same time, the market is becoming more selective. Several developments are attracting greater insurer attention, including large land rig losses, a rise in Control of Well activity, particularly in the Gulf of Mexico, and growing concern around mature plugged and abandoned wells, often referred to as “zombie wells”. In addition, an estimated USD 1.5bn of outstanding claims are still working their way through the market. Individually, none of these issues is enough to change the market’s direction. Together, however, they are encouraging insurers to think more carefully about where they deploy capacity and how they assess pricing.

Not all parts of the market are moving at the same pace. Offshore exploration and production continues to attract strong insurer interest, particularly for larger, well-managed operations. Outside the Gulf of Mexico, conditions remain highly competitive. Larger, well-performing programs continue to achieve reductions of 20–30%, with more modest 5–10% reductions for smaller programs. But recent Gulf of Mexico losses have introduced a degree of caution. Deepwater exposures are receiving greater scrutiny, and Operators Extra Expense (OEE) pricing has generally increased by around 10–20% in the region.

Onshore exploration and production also remains competitive, although the conversation is becoming more nuanced. Insurers are spending more time looking at Control of Well loss trends, the integrity of mature assets and the long-term exposure created by ageing infrastructure. The growing focus on zombie wells reflects wider concerns around legacy assets that can attract relatively low premium while carrying significant potential exposure. For most loss-free accounts, reductions of 5–10% remain achievable. Greater savings are still available for high-quality risks, although insurers are becoming more selective about where they offer them.

After several challenging years, the Offshore Contractors market is continuing to improve. Additional capacity has entered the sector and insurers are showing a greater willingness to support offshore construction activity, particularly major capital projects. Excess layers are generally well supported, while primary placements still require careful positioning and adequate pricing to attract interest. However, subsea work remains a more difficult area. Historical claims performance and concerns around pricing adequacy continue to influence insurer behavior, meaning these risks have not benefited from the same level of softening seen elsewhere in the market.

A number of factors will shape market direction over the next 12 months:

• Development of major outstanding losses
• Continued Control of Well activity
• Ongoing scrutiny of zombie wells and other legacy exposures
• Market consolidation among insurers
• Shifts in reinsurance sentiment
• The impact of major losses such as the CNOOC claim as reserves continue to develop

Ultimately, there is a growing view that the period of sustained double-digit reductions may be approaching its natural end, particularly within OEE placements. The likely outcome is a gradual move towards a more balanced environment, where risk quality, claims performance, and insurer confidence play a bigger role in determining outcomes.