A poll of delegates at Aon’s 10th Middle East Energy Conference found that 41% expect premium prices in the energy insurance market to remain flat for the next 12 months. A further 37% expect prices to decline slightly.
The findings confirm a general consensus among energy insurance market experts that while there was a rapid price increase in the energy insurance market in response to the significant losses endured by the industry earlier in the year, the effect was short lived and previous trends have been reasserted. The same survey found that more than half the respondents (53%) thought that it would take a further US$5 billion+ energy loss to bring an end to the current market cycle.
After the economic challenges of the last two years, insurance market security rating is still a key issue for everyone involved in the sector, with 37% saying that they saw it as the most important factor in their choice of insurance partner. Technical capability (26%) was the second most important factor, while competitive pricing was also a significant concern (23%).
Latif Alrayes, Chairman and CEO of Aon in the Middle East commented: “While the energy industry has weathered many storms over the past few years, barring any disasterous losses, the industry should be able expect flat or even declining insurance premiums over the next year. This should provide the sector with a level of relief and certainty around their operations and investments.
“We have taken the opportunity to bring together clients, underwriters and other industry experts to discuss not only the issues surrounding insurance for the energy industry, but also wider energy policy across the Middle East and globally. Bringing together all sides of the industry is a vital component in our role as an insurance broker, particularly in an industry that is in the process of trying to deliver some investment certainty after an exceptionally challenging couple of years.”