September 4, 2009 by Canadian Underwriter
Insurance premiums are predicted to remain flat for offshore energy business for October’s renewals, dependent on location, loss history and limit sought, according to Aon.
At the beginning of 2009, rates were expected to rise between 15% and 20%, according to an Aon release.
“For companies looking to insure large and/or complex risks, insurers are still trying to extract rate rises, as they seek to claw back profits from a sector that has been battered by catastrophic losses such as Hurricanes Katrina and Ike,” the release notes. “However many insurers are looking to retain market share so there are still good deals to be made.”
In the energy sector, large rate increases for medium-sized risks have failed to materialize thus far this year. Explaining why, Aon cites the following reasons:
• Although there have been a steady string of losses thus far, none have been considered ‘market-changing.’ Therefore, losses have not eroded the returns insurers have been able to make on the risks they have underwritten.
• Capacity in the insurance market has remained relatively stable.
• Confidence in the economy has begun to increase.
• Since more energy risks are being underwritten locally, London-based insurers increasingly need to offer competitive rates to secure new business.