Global Offshore Energy Insurance Market

The Global Offshore Energy Insurance Market refers to the specialized sector of the insurance industry that provides coverage for risks associated with offshore energy operations

March 26, 2025 • Estimated Reading Time: 13 minutes

Market Definition

The Global Offshore Energy Insurance Market refers to the specialized sector of the insurance industry that provides coverage for risks associated with offshore energy operations, including oil and gas exploration, production, and renewable energy projects such as offshore wind farms. This market encompasses a range of policies covering physical damage, business interruption, liability, and environmental risks. 

In 2023, the offshore energy insurance segment was valued at approximately USD 4.6 billion, with a 4.6% increase from the previous year, reflecting an upward trend following a bottoming out in 2019. 

The market is driven by factors such as fluctuating oil prices, geopolitical influences, extreme weather events, and advancements in offshore technologies. Key players include insurers from the UK (Lloyd’s and IUA), Mexico, Brazil, Japan, Malaysia, and Nordic countries, with varying market shares. The sector remains highly dynamic, with emerging risks related to climate change, supply chain disruptions, and reactivations of previously idle energy units​.

The global offshore energy insurance market experienced a significant decline from 2014 to 2019, with premiums dropping from $5.7 billion in 2014 to $3.4 billion in 2019. This period of contraction was driven by factors such as reduced offshore exploration and production activity, declining oil prices, and a competitive insurance landscape that exerted downward pressure on premium rates.

However, the market rebounded starting in 2020, marking a turnaround with premiums increasing to $3.6 billion in 2020, followed by continued growth in subsequent years. By 2023, premiums reached $4.6 billion, reflecting an 8.3% compound annual growth rate (CAGR) from 2019 to 2023. The recovery was fueled by rising offshore energy activity, a resurgence in oil prices, and increased risk exposure in the sector, which drove demand for more comprehensive insurance coverage.

The positive momentum in the offshore energy insurance market underscores the impact of cyclical energy sector trends, including price volatility, geopolitical factors, and evolving risk profiles. The industry’s ability to sustain growth will depend on continued investment in offshore projects, regulatory developments, and the capacity of insurers to manage emerging risks such as climate-related losses and geopolitical uncertainties.

Offshore Energy Insurance Geographic Breakdown

The geographic breakdown of the global offshore energy insurance market highlights the dominance of the UK, which accounts for 65% of the total available market (TAM), valued at $3.0 billion out of $4.6 billion. This overwhelming share is due to the historical and structural role of the UK as the global center for marine and energy insurance, particularly through Lloyd’s of London and the International Underwriting Association (IUA).

Why the UK Holds Such a Large Share

The UK’s dominance in offshore energy insurance is primarily driven by Lloyd’s of London, the world’s leading insurance marketplace, and the IUA, which represents London-based international insurers. These institutions offer specialized underwriting expertise, global risk pooling, and extensive reinsurance capabilities, making London the preferred hub for offshore energy insurance.

  • Lloyd’s of London: A marketplace rather than a single insurer, Lloyd’s operates through syndicates that provide underwriting capacity for complex and high-risk energy projects. Offshore energy operations, such as oil rigs and offshore wind farms, require bespoke insurance solutions that Lloyd’s is uniquely positioned to provide.

  • International Underwriting Association (IUA): Represents non-Lloyd’s insurance and reinsurance companies based in London, covering energy and marine risks. Many global insurers operate through the IUA to access the expertise and capital available in the London market.

Other Key Markets

Beyond the UK, Brazil (8.9%) and Mexico (7.5%) represent the next-largest offshore energy insurance markets due to their significant offshore oil and gas industries. Both countries have extensive deepwater exploration and production activities, particularly in the pre-salt reserves of Brazil and the Gulf of Mexico.

Other markets, including Japan (3.1%), Malaysia (2.5%), and Nordic countries (1.8%), contribute smaller shares, often driven by regional offshore projects, shipbuilding industries, and localized insurance needs. Meanwhile, the U.S. market is notably small (0.2%), as much of its offshore energy risk is self-insured or covered through captive insurance structures.

Market Implications

The UK’s dominance indicates that global offshore energy insurance remains highly centralized, with most policies underwritten and reinsured through London. However, emerging offshore energy markets and the shift towards renewable energy sources such as offshore wind could gradually diversify the market, leading to greater regional underwriting capacity in the coming years.

The offshore energy insurance market is closely linked to fluctuations in oil prices, as demonstrated by historical trends. From 2014 to 2019, both oil prices and offshore energy premiums experienced a sharp decline, driven by the oil market downturn that reduced offshore exploration and production investments. The industry bottomed out in 2019-2020, reflecting a prolonged period of low activity and a corresponding reduction in insured values and premium volumes.

However, the 2020-2022 oil price rally triggered a resurgence in offshore drilling and production, leading to an upswing in insurance premiums. Higher oil prices incentivized companies to restart or expand offshore projects, increasing risk exposure and driving demand for comprehensive insurance coverage. This correlation highlights the lag effect between oil price recovery and offshore energy premium growth, typically taking 12-18 months for market adjustments to be reflected in premium volumes.

While 2023 saw some stabilization, the future trajectory of offshore energy insurance will depend on OPEC+ production decisions, market capacity, and geopolitical developments. If production cuts are maintained, oil prices could remain high, sustaining offshore investments and further strengthening insurance premiums. Conversely, an unwinding of cuts or a global economic slowdown could dampen offshore activity, potentially capping premium growth. Additionally, capacity constraints in the insurance market—driven by rising claims costs, environmental risks, and evolving underwriting standards—will play a critical role in shaping premium trends moving forward.

Leading Oil Producers as Key Markets for Offshore Energy Insurance

The world's largest oil-producing countries represent critical markets for offshore energy insurance, as their extensive upstream operations require substantial coverage against physical damage, business interruption, and liability risks. The United States, Saudi Arabia, and Russia lead global oil production, collectively producing over 41 million barrels per day in 2023. These nations, alongside other significant producers like Canada, Iran, Iraq, China, and Brazil, contribute to the demand for offshore energy insurance due to their reliance on offshore drilling and deepwater exploration projects.

The United States is the world’s largest oil producer, with 19.4 million barrels per day, driven by offshore operations in the Gulf of Mexico, which account for a substantial portion of its output. The complexity and scale of deepwater drilling in this region make the U.S. a primary market for insurers covering offshore rigs, subsea infrastructure, and well-control risks.

Saudi Arabia and Russia, producing 11.4 million and 11.1 million barrels per day, respectively, have significant offshore activities, particularly in the Persian Gulf and Arctic regions. These high-risk environments require specialized insurance solutions, including coverage for extreme weather, political risks, and asset decommissioning.

Emerging markets like Brazil, the UAE, Mexico, and Norway are also key targets for offshore energy insurance. Brazil's pre-salt reserves in the Atlantic, Mexico’s offshore fields in the Gulf of Mexico, and Norway’s North Sea operations all represent high-value insured assets. Nigeria and Kazakhstan, while smaller producers, also rely on offshore oil fields, increasing their demand for insurance against operational risks, environmental liabilities, and infrastructure damages.

With offshore projects carrying high capital expenditures and long investment horizons, insurers play a crucial role in mitigating risks for oil producers, ensuring business continuity, and managing the financial impact of major disruptions such as oil spills, natural disasters, and geopolitical instability. As energy security remains a global priority, offshore energy insurance will continue to be a key enabler for oil-producing nations in sustaining their production and exploration activities.

Offshore Energy Insurance Potential Index: Key Market Attractiveness

The Offshore Energy Insurance Potential Index evaluates the most attractive countries for offshore energy insurance based on a weighted scoring system. The index assigns 60% weight to oil production volume (in barrels per day), 40% to logistics performance, and 10% to historical GDP growth. This methodology reflects the scale of offshore energy activities, infrastructure efficiency, and economic growth trends, all of which influence the demand for offshore energy insurance.

Top Markets for Offshore Energy Insurance

  1. United States (11,616 points) – The U.S. ranks highest due to its massive offshore production in the Gulf of Mexico, strong logistics infrastructure, and stable economic growth. Its advanced oilfield technology and regulatory environment make it a key insurance market.

  2. Saudi Arabia (6,834 points) – As a dominant OPEC producer with substantial offshore operations in the Persian Gulf, Saudi Arabia benefits from strong logistics networks and long-term oil market stability, increasing its attractiveness for insurers.

  3. Russia (6,646 points) – Russia’s significant offshore Arctic and Caspian Sea reserves contribute to its high ranking. However, logistics challenges and geopolitical risks create complexities for insurers operating in the region.

  4. Canada (3,393 points) – Offshore developments in Newfoundland and Labrador have driven Canada’s ranking, supported by its efficient transport infrastructure and stable economic growth.

  5. Iran, Iraq, and UAE (2,354–2,798 points range) – These countries remain attractive due to their high oil output and strategic offshore assets in the Middle East. However, sanctions and geopolitical risks impact their insurance markets.

  6. China (2,520 points) – China’s offshore oil fields and strong logistics performance contribute to its rank, although government regulations shape insurance accessibility.

  7. Brazil (2,102 points) – The pre-salt reserves in Brazil’s deepwater fields make it a prime insurance market, with steady GDP growth further supporting investment.

  8. Kuwait, Mexico, and Norway (1,200–1,746 points range) – These nations have significant offshore energy assets, particularly Mexico’s Gulf fields and Norway’s North Sea operations, making them attractive to insurers.

  9. Kazakhstan, Qatar, and Nigeria (1,064–1,135 points range) – While these countries have notable offshore projects, logistical inefficiencies and political risks weigh down their rankings.

Implications for the Offshore Energy Insurance Market

The higher a country ranks, the greater its demand for offshore energy insurance. Countries with strong logistics networks and consistent GDP growth present lower operational risks, making them more stable insurance markets. Conversely, markets with high oil production but weaker logistics performance or economic instability may require higher-risk premiums and specialized underwriting solutions.

As offshore exploration expands, insurance providers will prioritize markets with stable infrastructure, growing economies, and high offshore output, ensuring coverage aligns with risk exposure and market potential.

Upstream Energy Losses vs. Insurance Premiums

Upstream energy losses have shown significant volatility, with major spikes in 2005, 2008, 2017, and 2022, where losses far exceeded estimated premiums. The 2005 peak was driven by catastrophic events, including hurricanes, while recent spikes in 2022 and 2023 reflect increased operational risks, extreme weather, and geopolitical instability.

Despite the gradual increase in premiums, loss trends indicate that the insurance market struggles to keep pace with rising claim costs. The long backlog in reporting and settling losses, particularly for younger underwriting years, means actual claims may be higher than currently recorded. This imbalance pressures insurers to adjust pricing and risk models, reinforcing the need for higher premiums, stricter underwriting, and risk mitigation strategies to ensure sustainability in the offshore energy insurance sector.

Conclusion

The Global Offshore Energy Insurance Market has undergone significant fluctuations over the past decade, closely mirroring trends in oil prices, offshore exploration activity, and emerging risks. Following a period of contraction from 2014 to 2019, the market rebounded in 2020-2023, driven by rising offshore investments, oil price recovery, and the growing need for specialized insurance coverage against operational and environmental risks.

The UK remains the dominant hub for offshore energy insurance, with Lloyd’s of London and the IUA leading global underwriting. However, emerging offshore markets in Brazil, Mexico, China, and the Middle East are expanding, increasing the need for regional insurance capacity. The Offshore Energy Insurance Potential Index highlights the United States, Saudi Arabia, and Russia as the most attractive markets due to their high offshore production volumes, logistics infrastructure, and economic growth.

Despite the positive premium growth, upstream energy losses remain volatile, often exceeding collected premiums, which places pressure on insurers to adjust pricing models and risk strategies. Climate change, geopolitical tensions, and technological advancements in offshore energy will continue to shape the market, requiring adaptability from insurers to sustain profitability and coverage availability.

Looking ahead, the market's resilience will depend on its ability to manage risk accumulation, align with global energy transitions, and navigate regulatory changes. With offshore projects becoming more complex and high-risk, the demand for tailored insurance solutions and innovative risk management approaches will be critical to ensuring the long-term stability and growth of the offshore energy insurance sector.

Sources & References

Statista. (2023). Leading oil-producing countries worldwide in 2023. https://www.statista.com/statistics/237115/oil-production-in-the-top-fifteen-countries-in-barrels-per-day/