Published on 13 January 2026

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CASUALTY ENERGY MARKET UPDATE H1 2026

Published on 13 January 2026

London's energy liability market shows steady growth in 2026, with expanding US placements and moderating rate increases. US upstream risks see 2% rises while downstream sectors face 6-7% increases, though distressed accounts experience double-digit hikes amid claims pressures.

USA

At the start of 2026, the London insurance market continues to experience growth in US energy liability opportunities, reflecting a distressed and constrained US domestic market. The most significant growth is seen in the first USD25 million of insureds' coverage towers, especially those seeking general liability and lead umbrella coverage - benefiting from increased competition in London. Previously, domestic insurers dominated these segments, but London is now emerging as a preferred alternative with multiple quoting markets available.

Although the upward trajectory of US energy liability placements in London persists, the rate of premium increases is beginning to stabilise. Upstream-focused underwriters reported modest rate rises of around 2% for the latter half of 2025, while downstream and midstream risks placed with London markets experienced single-digit increases, typically between 6% and 7%.

Distressed placements, particularly those affected by adverse back-year loss deterioration, continue to experience double-digit rate rises. These increases are largely driven by elevated claims costs, with significant settlements - especially those involving personal injury or major pollution events - contributing to the trend. Auto-related exposures remain a particular challenge, with unpredictable claims patterns complicating risk assessment.

Despite these pressures, the London market remediation efforts since the end of the soft market are yielding positive results. Insurers are managing losses more effectively by deploying smaller line sizes, thereby limiting exposure to higher excess layers. Markets with diversified portfolios spanning onshore and offshore risks are proving resilient, supported by a balanced risk spread. Appetite continues to be strong for insureds with smaller auto schedules, and there is a continued preference for lower layers of coverage, especially for Exploration and Production (E&P) companies compared to oil and gas contractors. Additionally, traditional upstream-focused markets are broadening their scope to include midstream and downstream sectors, though with a disciplined and cautious approach.

The US energy casualty sector remained selective, in contrast to the generally softer conditions elsewhere in the insurance market as 2025 concluded. Insurers are applying greater scrutiny to process safety, maintenance practices, and transition risks. It is essential for brokers to highlight key differentiators in their clients' risk management strategies to secure optimal terms and outcomes.

International (Non-US)

The international energy casualty market has shown signs of increased softening as we entered 2026. The sector is seeing a rapid influx of new underwriting entrants, while established insurers contend with higher staff turnover, as underwriters are attracted to opportunities at start-ups or in more senior roles. This environment is contributing to notable rate reductions, particularly for attractive business originating from Canada and Australia.

For insureds not seeking higher coverage limits, there may be opportunities to restructure casualty towers by assembling panels of new insurers, especially when incumbent markets are unable to offer renewals terms acceptable to clients.

The London market is facing heightened competition from sophisticated local and domestic markets, necessitating larger rate reductions to retain business where local casualty offerings are robust. Early indications at the 1st January 2026 casualty reinsurance renewals suggested improved pricing for buyers, which should enhance brokers' negotiating leverage with international casualty markets in the year ahead.