Oil Insurance Market Report

Introduction

The increasing complexity and scale of oil and gas projects have heightened the demand for specialized insurance coverage, as companies seek to mitigate financial exposure from accidents, natural disasters, geopolitical disruptions, and cyber incidents.

As the world continues to rely heavily on oil and gas production while gradually transitioning toward renewable energy, the need for comprehensive risk management solutions has never been greater.

The oil insurance market size is projected to rise steadily from $23.7 billion in 2024 to $38.7 billion by 2033, growing at a compound annual growth rate (CAGR) of 5.6%. This sustained growth reflects not only the increasing value of insured assets but also a broader understanding of risk diversification and compliance across the energy sector.

Market Drivers

Several macroeconomic and operational factors are propelling the expansion of the oil insurance market. The first major driver is the continued growth in global oil production, which has historically increased at an average rate of 4.46%, as shown by long-term data trends. As production volumes rise, so do the associated risks—ranging from offshore drilling incidents to transport-related hazards—which necessitate robust insurance frameworks.

Another core factor driving market expansion is the concentration of oil production among leading global producers. The United States, Russia, and Saudi Arabia dominate global output, collectively accounting for over 43% of global production.

Their dominance underscores the need for highly specialized insurance programs that cater to massive upstream and midstream assets exposed to geopolitical and environmental threats.

At the end of 2024, the United States led oil production with 9,977.4 terawatt-hours, followed by Russia (6,121.8 TWh) and Saudi Arabia (5,933.3 TWh). These figures underscore the high concentration of risk in a few key geographies, each with distinct regulatory and operational frameworks. Canada, Iran, and Iraq also play important roles, further diversifying the risk landscape and increasing demand for region-specific insurance coverage.

In terms of global share, the United States holds 20.8% of worldwide crude oil production, while Saudi Arabia and Russia each contribute slightly over 11%. The dominance of these three producers reinforces the importance of comprehensive liability, property, and environmental insurance across large-scale operations that are vulnerable to catastrophic losses.

Measured in physical output, the United States produced approximately 857.9 million metric tons of crude oil in 2024, followed by Russia (526.4 mt) and Saudi Arabia (510.2 mt). These production levels, when correlated with rising asset valuations, have expanded the insurable base across the oil value chain—especially in upstream exploration and midstream logistics.

Market Dynamics and Segmentation

The oil insurance market encompasses multiple coverage categories, including general liability, property insurance, control of well insurance, business interruption, and environmental liability. Each segment caters to distinct operational needs within the upstream, midstream, and downstream sectors.

Upstream Sector

The upstream market, which covers exploration and production activities, remains one of the most active and competitive areas in energy insurance. According to the Gallagher market update, the upstream sector experienced a softening of rates throughout 2024, driven by excess underwriting capacity and improved safety records. The theoretical capacity in the upstream class now approaches $10 billion, an all-time high.

Actuarial observations indicate that the industry has become safer over the past decade due to heightened safety protocols and reputational risk awareness. As companies focus on ESG (Environmental, Social, and Governance) compliance and operational integrity, insurers are seeing improved claim ratios. However, risks such as offshore blowouts, well control incidents, and natural disasters remain critical exposure points requiring comprehensive coverage.

The interplay of stable commodity prices and prudent capital expenditure has also contributed to favorable underwriting conditions. The emphasis on safety, hazard identification, and near-miss reporting has reduced major loss frequency, supporting the continued deployment of capacity in this segment.

Midstream Sector

The midstream insurance segment, covering transportation, pipelines, and storage operations, has faced tighter conditions due to significant business interruption claims, notably from wildfires in North America. However, in 2024, the market began to stabilize as claim assessments matured and reinsurers recalibrated reserves.

An improvement in the global economy, easing inflation, and stable commodity prices have enhanced underwriting confidence. The expansion of domestic and London market capacity has led to downward pressure on premium rates, moving average program increases into the low single digits. Despite these improvements, the midstream segment remains more challenging than upstream, primarily due to higher cumulative loss ratios.

Downstream Sector

The downstream market, which includes refining, petrochemical, and distribution operations, has seen a gradual shift toward buyer-friendly conditions. A relatively benign loss environment in 2023 and the reentry of new managing general agents (MGAs) have fueled competition and capacity expansion.

Key focus areas for downstream insurers include business interruption, ESG compliance, and valuation accuracy. The introduction of the new LMA 5515A clause, designed to refine partial loss adjustments, highlights the sector’s move toward tighter policy language. Additionally, wildfire risk and vegetation management have become important underwriting factors, especially for refineries and processing plants in high-risk areas.

Power and Renewables Influence

While oil remains the cornerstone of global energy, the intersection of traditional energy and renewables is increasingly influencing insurance market behavior. The power generation sector has been impacted by geopolitical factors such as the Russia–Ukraine conflict and Middle East instability, which continue to raise concerns about energy security. These dynamics have sustained demand for insurance covering both conventional power and integrated oil-energy portfolios.

Although new underwriting capacity has entered the power generation market—especially from MGAs and Lloyd’s syndicates—coal-related coverage has declined sharply. In contrast, the renewable segment is witnessing fresh insurer participation, particularly in offshore wind and battery energy storage systems (BESS). These trends indicate a gradual diversification of energy insurance portfolios, reinforcing the interconnectedness between fossil fuel and renewable energy risk management.

Regional Market Overview

North America

North America holds the largest share of the oil insurance market, accounting for approximately one-third of global premiums in 2024. The region’s dominance is supported by extensive upstream infrastructure, sophisticated risk management practices, and a highly regulated environment. The United States, in particular, is a key market due to its leadership in both onshore and offshore production, as well as its exposure to natural catastrophes such as hurricanes in the Gulf of Mexico.

The U.S. market is also leading in insurance maturity, with high adoption of cyber, business interruption, and environmental liability policies. Canada’s midstream and downstream sectors further contribute to regional growth, supported by expanding pipeline and storage capacity.

Asia Pacific

Asia Pacific is projected to record the highest CAGR (8.2%) through the forecast period, driven by rapid economic growth, increasing energy demand, and rising investments in infrastructure. China, India, and Australia are emerging as critical players in upstream and midstream development. As the region expands its exploration activities and refining capabilities, insurers are tailoring products to cover new project risks and regulatory complexities.

The expansion of LNG (liquefied natural gas) terminals, offshore drilling projects, and pipeline networks in the region has also created strong demand for marine cargo, construction all-risk (CAR), and liability insurance products.

Europe

Europe remains a mature but evolving market, characterized by strong environmental regulation and a focus on ESG compliance. European insurers are increasingly scrutinizing new oil and gas projects, especially those lacking robust sustainability narratives. However, the region still offers substantial opportunities in the downstream and energy transition segments, including carbon capture, hydrogen development, and green refinery projects.

Target Markets for Oil insurance

Oil insurance demand varies significantly across nations depending on production levels, regulatory frameworks, and insurance maturity. The United States stands out as the most mature and well-insured oil market, with a high penetration of specialized risk products and a strong correlation between production scale and insurance sophistication.

Canada, Saudi Arabia, and Kuwait also represent advanced markets, combining high production levels with robust insurance adoption. Conversely, emerging markets such as Brazil, India, and Indonesia are still developing their energy insurance ecosystems, providing new growth opportunities for international insurers seeking market diversification.

Competitive Landscape

The competitive environment of the oil insurance market is defined by the presence of major global insurers, reinsurers, and brokers. Leading companies such as AIG, Allianz Global Corporate & Specialty, Zurich Insurance Group, Chubb, and AXA XL dominate the market with extensive expertise in energy risk underwriting.

Brokerage firms such as Marsh & McLennan, Willis Towers Watson, and Arthur J. Gallagher & Co. play vital roles in structuring complex risk programs, leveraging their networks to optimize coverage terms for clients.

The Gallagher report highlights that upstream and midstream insurers are currently in a softening cycle, while power generation and casualty lines remain under moderate pressure due to reinsurance constraints. Nonetheless, growing competition among insurers and the entry of new MGAs are creating favorable conditions for buyers, driving innovation in underwriting and claims services.

Key trends shaping the competitive landscape include:

• Greater use of digital tools for risk assessment and real-time monitoring.

• Expansion of cyber risk coverage linked to IoT-integrated oil operations.

• Stronger emphasis on sustainability-linked insurance products, aligning with ESG reporting requirements.

• Strategic partnerships between insurers, reinsurers, and analytics providers to enhance data-driven underwriting.

Opportunities and Threats

The oil insurance market presents diverse opportunities tied to technological advancement, regulatory evolution, and environmental awareness. Insurers can capitalize on the growing need for cyber insurance, parametric products, and renewable integration coverage. Emerging technologies such as predictive analytics and AI-based maintenance forecasting are enabling more accurate risk quantification, reducing uncertainty in premium pricing.

However, the market also faces significant threats. Geopolitical instability, particularly in oil-producing regions like the Middle East and Eastern Europe, continues to expose insurers to unpredictable losses. Climate-related risks, such as hurricanes, floods, and wildfires, are increasing in frequency and severity, challenging traditional risk models and raising reinsurance costs.

The tightening of environmental regulations worldwide further complicates underwriting, as insurers must balance profitability with sustainability mandates. Additionally, claims inflation, driven by high repair costs and legal settlements, remains a persistent concern, particularly in the U.S. casualty market.

Future Outlook

Looking ahead, the oil insurance market is expected to maintain steady growth through 2033, supported by ongoing investments in oil infrastructure, digital transformation, and ESG-aligned risk management. Market maturity will continue to vary by region, but global convergence in insurance standards is likely as regulatory frameworks evolve.

The interplay between oil and renewables will also intensify, with insurers increasingly required to design hybrid coverage models that accommodate both traditional and low-carbon energy portfolios. New underwriting models leveraging IoT data, satellite imagery, and AI analytics will enhance predictive capabilities, allowing insurers to manage complex risks with greater precision.

Despite challenges, the overall market trajectory is positive. With strong insurer participation, expanding capacity, and increasing client awareness of risk management best practices, the oil insurance industry is positioned to remain a cornerstone of global energy resilience.

Sources & References

Data Intelo. (2025). Oil and Gas Insurance Market. https://dataintelo.com/report/global-oil-and-gas-insurance-market 

Energy Institute. (2025). Statistical Review of World Energy 2025. https://www.energyinst.org/__data/assets/excel_doc/0008/1656215/EI-Stats-Review-ALL-data.xlsx 

Gallagher. (2024). Energy, Power and Renewables Insurance Market Update. https://www.ajg.com/-/media/files/gallagher/us/news-and-insights/2024/energy-power-and-renewables-insurance-market-update.pdf 

Market Intelo. (2025). Oil and Gas Insurance Market Research Report 2033. https://marketintelo.com/report/oil-and-gas-insurance-market 

Our World in Data. (2025). Oil production. https://ourworldindata.org/grapher/oil-production-by-country?time=earliest..2024 

World Bank. (2025). Insurance and financial services (% of commercial service exports). https://data.worldbank.org/indicator/TX.VAL.INSF.ZS.WT 

World Bank. (2025). Insurance and financial services (% of commercial service imports). https://data.worldbank.org/indicator/TM.VAL.INSF.ZS.WT