Property

Upstream

Through the first half of 2024 we saw single to low double-digit rate increases in the Upstream Energy Insurance market after a punitive run of reinsurance treaty renewals. This was driven by a combination of political uncertainty, increased frequency & severity of CAT losses, and global inflation. These treaty renewals saw retentions increase for insurers as well as rate after reinsurance capacity withdrawals, and this cost was passed on to consumers. As the year progressed, with pressure from management to grow portfolios and protect market share, insurers were forced to soften their stance and the market started to ease. By the end of 2024, single digit rate reductions on loss free, core appetite business were common.

Rating corrections in 2024 saw the reinsurance market make healthy returns on capital for the first time in several years. This attracted new entrants and increased capacity (increase of ~9% to $620bn), creating additional supply versus demand. Overall, 2024 – 25 Upstream Treaties were favourable, being either flat or single digit rate reductions, setting the tone quite clearly for what we should expect for 2025.

The Upstream market consists of several ‘sub-classes’, all of which have their own challenges and market dynamics. Below we outline the current market conditions and what we expect for the remainder of the year.

On/Offshore E&P

There has been little change in the core appetites of markets from 2024 to 2025. Offshore Exploration and Production (E&P) Operators continue to have the largest following with insurers looking to deploy more capacity in respect of these risks over the course of the next 12 months.

Due to increasing capacity in the Upstream space, this sub-class has seen the most significant benefit of the softening market, ranging from 5-10% reductions on smaller accounts (<USD 1.5m Premium spend) to 20-30% reductions on the larger premium accounts (>USD 1.5m premium spend).

Whilst there is greater appetite from insurers to write Offshore risk, rather than Onshore, there remains plenty of capacity, creating downward pressure on rating to the benefit of the buyer. Although we have not seen the same level of reductions as with some larger offshore accounts, we have seen most loss-free accounts achieving single digit reductions. Some larger more notable clients have received 10%-20% premium savings.

Onshore Service Contractors

Onshore service contractor risks are not a target market for most insurers. Several capacity providers have withdrawn from the sub-sector due to continuing attritional losses. Most losses are from fleet / transportation activities, and insurers have increased retentions on these policies to limit their losses. However, due to the overall Upstream environment, we are still seeing certain onshore service contractors, who have operated effectively, achieving flat to low single digit rate reductions.

Pressure Pumping / Fracking and Salt-Water Disposal

Pressure Pumping / Fracking and Salt-Water Disposal risks have not been profitable for insurers, due to attritional and larger losses in the Frac space in 2024-2025. Certain markets who were considered leaders in this space, notably Brit, have exited this sub-class resulting in a decrease in capacity. Therefore, we are seeing large increases to retentions for assets in the ‘red zone’, in some cases doubling, and single to low double-digit rate increases.

In respect of Salt-Water Disposal, lightning strike / static discharge remains the most common cause of claim, and insurers have not found one type of lightning protection that is significantly better than others. Market capacity for these risks remains restricted and rates are continuously being pushed by insurers.

Offshore Contractors

Offshore Construction and Subsea Construction face challenges in relation to securing insurance, mostly due to large capital expenditure (CAPEX) projects with high cover capacity requirements. For these projects, there is usually keen insurer appetite to write excess layers on large placements. There is also less appetite to lead a programme, but insurers will consider these risks if pricing is deemed adequate.

However, clients purchasing Subsea Construction policies will not have the same experience. It is one area of the Upstream Energy market that has not seen as large rate reductions in the last 12 months. Even projects with modest values can struggle to attract insurer interest and the main reason for this is the sector’s loss record.

High profile and high quantum Subsea losses in Turkey, Mexico and elsewhere in 2023-24 have cost insurers significant sums, making these risks unattractive.

Whilst we are seeing some softening from 2024, these losses are still having an impact on rating. The claims record has been exacerbated by the driving down of Subsea rates to the point at which many insurers see the premium income as inadequate for the almost certain claims activity on their book.

Owing to the large volume of construction projects starting at the beginning of 2025, most markets have already hit their construction budget for the year with significant premiums being placed. This could result in less competitive quotes from some markets as they are not looking to increase their construction portfolio at this time.

Gulf of Mexico (GOM) Wind

Due to the benign CAT loss environment, the Property Market has not been as challenging as thought in recent years for operations in this region. Whilst GOM wind rates remain very competitive, we are seeing certain markets looking to deploy more capacity on wind to meet growth targets in a softening market.

Whilst not specific to wind, Deep Water GOM is an area where markets are looking for rate increases or increased retentions. This is due to multiple losses in this space in 2024-25, including three Murphy-operated incidents, potentially totalling ~USD 200m of losses. As such, certain insurers are looking to decrease their participation in this space, although there is still significant capacity.

The outlook for 2025 is certainly that whilst insurers look to increase / maintain market share, they will compete on rates and continue to improve purchasing power for clients for the foreseeable future.

We are still ahead of the GOM Wind season, and any claims activity through that period could have significant impact on the market.

General Property market rate trends

Through 2024 we saw a steady reduction in (re)insurance rates across the general property market. Insurance rates tend to follow those that we see in the reinsurance market. This graph, taken from our proprietary benchmarking system, evidences that rates have been on the decline. This is reflected within this update.

Midstream

The Midstream Energy sector is currently benefiting from high levels of stable capacity and limited loss activity, creating a strong buyers’ market. Rates as of Q2 2025 are trending down 2.5% to 7.5% for loss-free accounts, providing both clients and brokers with opportunities to push for coverage improvements and premium savings.

Established insurers in the Midstream sector have maintained a strong commercial mindset and competitive positioning as new market entrants have created additional capacity. This has driven competition between insurers, which continues to drive rates down. It is expected that the market will continue to soften for the foreseeable future, until a major loss event occurs that triggers a drop in available capacity.

It is the opportune time to ensure that you review your existing terms and conditions and push for coverage enhancements. We are agreeing renewal objectives with our clients, and driving conversations with insurers to secure optimal terms, while the market is in favour of the buyer.

Market trends

While a soft market presents opportunities, it is crucial that an element of discipline is maintained. Clients who continue to work with insurers, providing key information, monitoring their values and completing risk engineering improvements, where appropriate, will experience more positive outcomes when the market hardens in the future.

Information

Insurers require comprehensive risk information, and clients who demonstrate a strong understanding of their own operations, evidenced by prompt, detailed responses to underwriting queries will achieve better renewal results. Key documentation required by insurers include an up-to-date schedule of values, loss history, and risk engineering reports. We help our clients identify and compile the documents that will secure optimal results.

Natural Disasters (CAT)

Managing CAT exposure continues to be a central focus for insurers as they seek to monitor and control aggregation across their portfolios. While CAT exposure remains a key pricing driver, recent years have seen few major named windstorm or earthquake losses. Therefore, CAT-exposed clients are beginning to benefit from more favourable purchasing dynamics.

Business Interruption

Business Interruption values spiked globally following the Russian invasion of Ukraine, driven by heightened uncertainty around commodity markets and supply chains. This pressure has since eased, and the stabilisation of declared values is being welcomed by insurers.

Risk Engineering

For smaller Midstream clients, risk engineering requirements are typically minimal. However, for larger clients (particularly those with high value, complex sites), insurers require engineering reports to enable them to provide capacity. Well-prepared risk engineering reports are critical to accurately represent the risk. In many cases, the market is willing to contribute toward the cost of producing such reports, recognising the mutual benefit. Not only do they provide insurers with greater clarity, but they also offer clients a pathway to long-term risk improvement. We have an in-house team of engineers available to conduct site visits and support clients through this process.

Lockton Midstream Facility

The Lockton Midstream Facility is designed to support small to mid-sized clients procure insurance efficiently. With a panel of 6 different potential lead insurer choices, and a wording developed by Lockton’s energy wording specialist crafted to favour clients, ensuring clarity and protection with the unique needs of the midstream sector. The result being market beating outcomes with the security of a wording you can trust.

The midstream insurance market remains competitive, with shifting pricing dynamics allowing Lockton to leverage our strong market relationships to deliver excellent outcomes. Close collaboration between our regions enables us to act swiftly when needed, ensuring our clients always come first.

Downstream

The Downstream market entered a pronounced softening phase in Q4 2024, with most loss-free accounts experiencing rate reductions of 5% to 10%. Competition among insurers remains intense, particularly for high-premium accounts, which is driving further rate decreases. Despite four major losses so far in 2025 (totalling an estimated USD 2.5 billion) the softening trend continues.

Several factors have contributed to this shift. Loss activity was limited, and new capacity entered the downstream market. Throughout 2025, insurers have put pressure on incumbent leader pricing in a bid to secure full signed lines or gain participation on placements. The result of this has been further softening of rates:

Asia/MENA: up to -30%
LATAM: -15% to -20% (depending on Nat Cat exposure)
North America: -7.5% to -12.5%
Europe : -15%

This competitive pressure has prompted carriers to target risks they may have previously declined, intensifying competition even on challenging accounts. The most significant rate reductions are seen on accounts with strong premium volumes and robust engineering standards.

As is typical in a soft market insurers requests for information can be rebuffed. Nevertheless, we advise clients to uphold their long-term risk profile by submitting high-quality renewal data and actively addressing risk recommendations and valuations. Maintaining a strong reputation during a soft cycle will be essential when the market inevitably turns.

Focus Areas

Key insurer concerns continue to include Business Interruption, Valuations, and increasingly, Wildfire and Flood exposures.

Business Interruption remains under scrutiny, with volatility clauses now standard on most accounts. The LMA 5515A clause—an updated volatility clause including a Partial Loss Adjustment Factor—was introduced last year but has seen limited adoption.
Valuations remain a priority. Insurers expect clients to ensure their asset bases are accurately valued through third party assessments.
Wildfires and Floods are becoming a greater concern in certain regions, prompting insurers to restrict coverage and tighten mitigation requirements.
Cyber and ESG discussions, once front and centre, have seen reduced focus, though Cyber coverage may reemerge as a key area for expansion as the market stabilises.

Getting the most from the market

The current market conditions are down to significantly increased competition as insurers seek to maintain premium volume and profitability despite decreasing rates. History shows that this soft market can end with an abrupt hardening should losses exceed total market premium (~USD 4Bn) resulting in a reduction of capacity.

While clients should take advantage of favourable pricing to recoup previous rate increases, managing a soft market requires as much discipline as navigating a hard one. Insurers are pushing for larger shares, and new entrants are eager to participate. We recommend:

Maintaining regular engagement with long-term insurers.
Diversifying placements across multiple carriers to reduce reliance on any single insurer.
Exercising caution with broker facilities, which often rely on speculative capacity.
Considering long-term agreements (LTAs) for portions of the program with carefully selected partners.
Evaluation of current policies to maximise additional coverages.

These market dynamics present a timely opportunity for clients to reevaluate their insurer relationships. In addition to favourable rates, now is a good time to improve terms and conditions, as insurers seek alternative ways to compete. Due to the loss activity discussed, this soft market may be short-lived, so clients should prioritise a thoughtful, balanced approach over aggressive price negotiation alone.

Power Generation

Through the start of 2025 we have seen a continued softening of the Power Generation market, and we anticipate this tread to continue throughout 2025. The key contributing factors are the increased capacity from existing insurers along with new entrants to the sector, as well as the relative benign loss activity over the past 2 years.

We have seen the following engineering insurers enter the conventional space, Ascot (Joule), Hartford and Markel. This has added to the increase in capacity and the softening of the market, which arguably is at a faster pace than other subsectors Energy & Power.

More markets are entering or putting more focus on Renewables including Arch and The Hartford, as well as new MGA’s entering the market including Volt, Novagen and PERse.

It’s the rates that have been coming under pressure. The discipline around terms and conditions remains in place and we are not yet seeing increased pressure for insurers to provide wider coverage and lower deductibles. The reduction in rates is down to several factors:

Replacing / challenging the expiring markets who may have had higher pricing to complete previous placements
Driving new markets to provide competitive terms to differentiate from current participants
Restructuring programmes to maximise market conditions to further create competition and options for clients

Insurers are still requesting updated asset valuations before calculating premium, including a monthly breakdown of organisation’s revenue figures. Up to date surveys and recommendations remain very important to demonstrate a solid risk management approach as the supply chain is certainly easing, key components still require a long lead time so sparing and agreements to access critical components remain important as business interruption incidents are an area of concern for insurers.

Geographic / sector differences

The markets in the Middle East and Europe remain very competitive. Insurers operating in Latin America are actively competing with the London Market for market share. In the US, insurers are also becoming aggressive as they try to increase their market share in this sector. However, due to the increased capacity in London and insurers chasing/retaining their North American portfolio’s the London market in general is viewed as being more competitive for the time being.

Australian insurers remain strong and are increasing their market capacity locally with new hires at AIG & Everest, increasing competition for Australian business.

Asia continues to remain competitive with most placements being completed domestically or within the region.

Natural Catastrophe (CAT)

As the general prices reduce, clients are taking advantage of increasing CAT limits compared to those available in previous years. CAT capacity remains at a premium and markets will continue to heavily scrutinise their aggregate positions but there is more capacity available. This additional capacity is also from a mix of renewables, power and property markets looking to diversify their portfolios with excess CAT layers.

Summary

Rates are being driven down by a combination of increased capacity, benign loss activity, and an absence of major CAT events impacting the industry. With the new capacity coming into the market, coupled with pressure on existing markets to offer improved rates; the overall capacity is expected to continue to increase considerably. Placements are oversubscribed by 120% across all geographies and technologies and we don’t expect this to change in the absence of large losses. Coverage changes are likely to favour clients, opening opportunities to increase CAT limits and negotiate lower rates. Deductibles, however, are likely to remain in place at similar levels for the time being.

We take advantage of the current market by encouraging competition between key lead markets to ensure pricing remain competitive.

Insurers are keen to maintain profitable portfolios with clients that have been loyal over a long period of time. Therefore, during the renewal process, allowing time for a full marketing of your placement is important. The incumbent insurer needs to be aware they will be under competition from alternative leads and newly established markets looking to increase their portfolios. Having up to date engineering details and valuations information is important to help differentiate your organisation. A review of your current policy wording is key to ensure it is ‘current’ and can respond to your needs.

We have dedicated professionals focusing on the Power sector, providing competitive solutions year after year, resulting in a client retention rate of 96%.

Renewables

The renewable energy property market remains stable in H1 2025. This stability is largely because of market discipline, where deductibles and sub-limits have been well managed by insurers. This discipline has meant that insurers have controlled the cost of attritional losses and minimised the impact of shock CAT losses. Therefore, renewable energy remains an attractive market for insurers, particularly with the green credentials that come along with being a renewable energy insurer.

Strong sector performance has also been driven by new insurers continuing to enter the market, offering additional capacity, and driving competition between insurers which benefits buyers. To counter new entrants, established insurers are proposing competitive renewal terms to maintain their market share. This competition should lead to the erosion of restrictive terms over the course of this year and beyond, and drive premiums down.

Greater standardisation of technology should make underwriting easier, and give rise to more broker led facilities, which will improve efficiency for clients and allow for greater uptake by insurers to support continued renewable energy growth.

However, US assets make up a large portion of the London renewable energy insurance market, but the US territory comes with additional risks, from the physical, with the ever-present CAT perils, to the political, with the looming threat of tariffs stalling what is currently a robust new project pipeline. Increasing numbers of market players paired with tariff-driven US delays on new projects will put downward pressure on the London renewable energy insurance market in 2025.

There have been some areas of discussion related to certain subsectors within the renewable energy insurance industry, which we discuss below:

Wind

In recent years, there have been several large losses relating to design issues, which have unnerved insurers. Recently, there has been an increased focus regarding what Long Terms Service Agreements (LTSA) are covering, and more importantly, what they are not. The robustness of these contracts can be the key driver in determining whether a wind power risk is profitable, or not, for an insurer, hence their focus on them.

We have seen the deductibles implemented by insurers in recent years for wind turbines increase significantly. This caused an initial shock among owners of wind installations. However, these have stabilised, with the “rule of thumb” being that the property damage deductible should be equal to the replacement cost of a turbine blade.

Chinese technology continues to penetrate more geographies, with this increased utilisation, insurers are becoming more comfortable underwriting these assets

Solar

Through 2024 the solar energy insurance market was hit by large CAT losses, particularly in the US because of hailstorm damage, and in the Middle East due to windstorms. More restrictive deductibles and sub-limits imposed by insurers for hail damage in the US made these losses manageable for insurers. Solar Energy companies will need to factor in additional self-insured retentions for installations located within high-risk CAT zones when assessing project risk.

Outside of CAT risks, theft and invertor fires were the main drivers of claim frequency and severity, making solar one of the harder classes for insurers to underwrite profitably.

Battery Energy Storage Systems (BESS)

The growth and positive performance of BESS has been a bright spot for renewable energy insurers.

The technology involves complex chemistries that do bring significant risk. But the standardisation and risk mitigation techniques utilised in the latest generation BESS systems have kept loss rates well below that of wind and solar.

The “mega” loss at the indoor BESS site Moss Landing, in California, is reported to be in the hundreds of millions of dollars. This loss will certainly impact insurer financial performance. But the inherent differences in risk profiles between Moss Landing versus most of the global BESS fleet, means that the loss is unlikely to have a fundamental impact on insurers appetite to write BESS risks.

Energy Transition

The Energy Transition sector continues to evolve at pace, creating complexities but providing opportunities for businesses and insurers alike. While insurance capacity in the Property market remains broadly stable, insurers are becoming more selective, particularly when it comes to newer technologies such as hydrogen, carbon capture, and advanced battery storage, where performance data is still developing, and perceived risks remain high.

We expect Property insurance rates for Energy Transition projects to broadly track wider market trends. More established technologies like solar and onshore wind are starting to benefit from greater competition between insurers, with rates beginning to ease. However, insurers remain cautious, especially considering recent losses and the increasing impact of extreme weather events on energy assets.

We see real opportunity for clients who are well-prepared. In a market that is becoming more cautious, businesses that can clearly explain their risks, supported by strong data, risk engineering reports, and continuity planning, are more likely to secure favourable terms. Early engagement and open dialogue with insurers are becoming increasingly important.

We're also seeing differences emerge between insurers. While some are pulling back from more complex or unfamiliar risks, others are actively looking to support well-structured projects. This presents an opportunity for clients to stand out by demonstrating technical rigour, sound project governance, and a proactive approach to risk management.

To make the most of current conditions, we recommend clients:

Share clear and comprehensive engineering insights, especially where there’s exposure to natural catastrophe risks
Ensure insured values are regularly reviewed and reflect current replacement costs
Engage insurers early, giving time to explore options and address questions
Be transparent about project timelines, partners, and ongoing risk mitigation plans

As the Energy Transition continues, the insurance market will adapt. With the right preparation and advice, businesses can not only navigate this evolving landscape but use it to their advantage. We work closely with clients to do just that, helping them tell their story clearly, manage risk effectively, and achieve the best possible insurance outcomes in a fast-moving sector.