Posted in News on 16 Dec 2022

Now we have moved into Q4 of 2022, some of the reductions we were seeing in the 2nd and 3rd Quarters have started to tail off as the loss estimates from some of this year’s earlier incidents begin to become clearer space. Renewals even with good loss records are now expected to go for single digit rate rises.

Capacity remains stable and we are not expecting this to be very different in 2023 with realistic working capacity available being in the region of USD4bn for international programmes and USD2.5bn for North American.

There continues to be an ever greater focus on Environmental, Social and Governance (ESG) issues across the globe and of course this will undoubtedly impact on almost all fossil fuel programmes sooner or later. Many insurers through corporate requirements are under great pressure to review their downstream portfolio with a particular emphasis on the ‘E’ of ESG. Whilst at this stage there is no market consensus on the issues we’re all facing with no-one in a position to predict how the downstream market will be impacted in the years to come. What we can say for certain is that we can expect insurers to require more focus on their clients ESG policies in order that they are able to demonstrate to their own managements and shareholders that they have taken this into account when determining the balance of their portfolio.

Valuations and in particular those for Business Interruption continue to be under the microscope owing to events globally, in particular as a result of the Russia/Ukraine conflict, leading to inflationary pressures across all types of assets and of course in particular on the value of hydrocarbons. Insurers are looking to Insureds to ensure that the values of all their assets are kept up to date.

In addition to the pricing conditions we have described above, there continues to be a push for tightening of terms and conditions where possible. We have seen this in three main areas being Testing and Commissioning with the push for the new LMA5197A Clause; the reversion to the Cyber Exclusion Clause NMA2916A over LMA5400; and finally in relation to Business Interruption values with the new LMA5515 Clause.

Whilst at the time of writing there are no specific sanctions on oil and gas emanating from Russia, there has been a push for policies to include an Excluded Territories Clause (Russia, Ukraine and Belarus) with main focus being to exclude CBI losses emanating from failure to supply crude or gas from one of the excluded territories. 


Glyn Davies

Executive Partner, Downstream Energy
+44 20 7204 8558


Michael Cosgrove

Partner, Downstream Energy
+44 20 7234 4243