Willis Group Holdings August Energy Market Review (EMR) highlights the decision by Oil Insurance Limited (OIL) to increase its per occurrence limit from $300 million to $400 million and the event aggregation limit from $900 million to 1.2 billion effective January 1st, 2015, taken at a Directors’ meeting in July.
In addition the Willis report notes that “OIL will give its members until January 1, 2017 to move to the $400 million limit in order to facilitate the adoption of the additional $100 million limit into their insurance programs.
“Atlantic Named Windstorm (ANWS) limits will remain the same at $150 million part of $250 million with a $750 million event aggregation limit.”
Willis EMR also noted that its annual Energy Market Review, published in May, “highlighted the effects of an ever-increasing amount of capital being invested in both the Upstream and Downstream insurance markets.”
Wills said that since publication, “we have received a degree of feedback from some underwriters, who have pointed out that some insurers will not be able to bear a continuing softening into 2015, that losses are on the increase and that an upward turn in rating levels by next year will be essential if the market is to continue to thrive in the long term.
“However, we would suggest that this sentiment may simply be wishful thinking from the market. There are plenty of signs to indicate that not only are some insurers continuing to make money, but that a large proportion of the capital that has recently been invested in the energy market is here for the long-term.
“Indeed, it is now entirely possible that the current soft market conditions may continue to prevail, even if the industry is seriously impacted by a major hurricane in the Gulf of Mexico or other major catastrophic loss during the latter half of the year. And with OIL introducing an option to increase members’ any one accident or occurrence limit to $400 million competitive pressures in both the upstream and downstream markets seem to be stoked even further.”
Source: Willis Group Holdings