Sentiment has changed in the energy insurance market, but it appears that capacity has not. Apart from the very largest risks, there is still an oversupply of underwriting capacity in the energy insurance marketplace.

Natural catastrophe exposures continue to be at the top of the agenda and pricing for these, particularly for downstream risks, is edging up, albeit at a moderate pace.

In this edition of Marsh’s Energy Market Monitor, we review in detail the various classes of energy insurance. The specifics are different and probably none more so than in the liability area.  For companies with U.S. exposures, capacity has shrunk and therefore pricing has moved.

For the main premium driving markets of energy risks — onshore property, upstream property and control of well — we expect a flatter market in 2012. The one fundamental change that has occurred in the last twelve months is the significantly increased spread between the highest and the lowest price available in the market. This is probably what many will see as the first sign of the market in transition.