Published On: Wed, Sep 30th, 2015

Global Energy & Power Insurance set to rake in US$24.5bn in three years

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From Ngozi Onyeakusi, Lagos

Global Energy and Power Insurance premiums worldwide is likely to rake in additional value of approximately $24.59 billion under a low oil price scenario segmenting between around $14.14 billion in energy insurance premiums and around $10.45 billion in power insurance premiums in 2018, a research has shown.

Finaccord, a market research, publishing and consulting financial services company which made the forecast, equally stated that  Canada was second largest energy and power insurance market in the world with US$1.77 billion in premiums in 2014.

Finaccord’s study – “Global Energy and Power Insurance: A Worldwide Review” found that energy and power insurance premiums worldwide, including business handled by captive and mutual insurers, amounted to approximately $23.56 billion in 2014. This increased from about $21.48 billion in 2010 – equivalent to a compound annual growth rate in nominal terms of 2.3 percent.

In 2014, this total market segmented between approximately $14.16 billion from energy insurance premiums and about $9.40 billion from power insurance premiums, with the United States “by far the largest market at around $8.38 billion, followed by Canada at $1.77 billion and China at $1.45 billion,” Finaccord said in a statement.

With regards to energy insurance premiums, in particular, these broke down between around $7.15 billion from upstream insurance, around $2.17 billion from midstream insurance and around $4.84 billion from downstream insurance.

Territories in scope included, Nigeria, Brazil, Canada, China, France, the GCC countries (i.e. Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates), Germany, Japan, the United Kingdom and the United Sates, “with the rest of the world expressed as a residual balance in the overview report for both energy and power insurance,” the statement said.

“At the global level, upstream energy insurance premiums have been growing at twice the rate of midstream premiums, while downstream premiums actually declined between 2010 and 2014,” said Finaccord consultant Christian von Celsing in the statement.

“The more rapid increase in the value of the upstream segment can be attributed to rising exploration and production worldwide. On the other hand, it is generally the case that insurance pricing for downstream assets has been subject to the most pressure.”

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