2022 Energy State of the Market

After a year of slashed demand in 2020, global oil demand surged in 2021 as the world began to recover from the coronavirus pandemic. In 2022, energy demand and commodity prices are still up, indicating that the energy industry is strong (source 3). Refineries are operating at approximately 95% capacity, and many companies would like to expand operations conservatively. But, like other industries all across the country, energy companies are struggling to find and hire qualified employees to fill positions. They’re also grappling with ongoing supply chain problems that make it difficult to obtain materials and purchase or repair vital equipment. As the insurance marketplace continues to contract, prices are rising for several product lines.


In 2022, crude oil consumption is expected to reach 99.53 million barrels per day (bpd), just shy of 2019’s pre-pandemic 99.55 million daily barrels.3


The 2022 professional lines market is more aggressive, and underwriters are cautiously optimistic. From a pricing standpoint, the primary is often coming in flat, and excess rates are still very competitive with some coming in a little below 60%. Significant increases aren’t anticipated unless an account has seen a substantial increase in assets, revenue, or exposure. Overall, underwriting is scrutinizing financials to confirm that insureds aren’t overextended when it comes to debt and are operating conservatively. Carriers are also willing to consider writing drilling and oilfield services accounts (i.e., those that provide equipment or supplies to the production side), depending on where the client is in the energy production cycle. While commodity prices are up, the current regulatory climate can make it more challenging to extract oil. It’s also difficult to obtain new oil and gas leases, so those without previously leased assets are often unable to launch drilling in new areas.

Prior to 2022, underwriters typically avoided renewable energy accounts because of a lack of known performance history. From a D&O perspective, investors are often suing renewable energy companies due to a lack of investment profits, which is generating some losses. Underwriters are now cautiously interested in more well-known renewable energy sources such as wind and solar but remain wary of biofuels, which are still very difficult to place. Coal exposures are also almost impossible to quote because most major players have taken a position against supporting the coal industry.


The casualty market is also proving to have its ups and downs. On the contractor side, it may be possible to negotiate rate decreases. Many accounts are coming in flat or topping out at a 5% increase. Some incumbent insurers may find that their casualty business is back in play because switching to a new carrier can often generate greater savings for clients than an incumbent can offer through a rate decrease at renewal.

The lease operator book has recently been hit by hyper claims inflation, particularly in Texas, due to staggering awards on commercial auto and bodily injury claims. Louisiana also remains a challenging venue due to litigation. For oil lease operators, increases are common, particularly on the primary umbrella, as carriers grapple with rapid claims inflation. The general liability is typically seeing 10% increases and the first layer umbrella is being hit with price bumps of 20%-30%. Wet accounts may see increases reach up to 50% within the next year.

Over the last few years, auto losses have consistently penetrated the excess, causing excess carriers to significantly increase auto premiums for the lead $25M. In some instances, contractors are requiring stand-alone auto towers for accounts with more than 150-250 units. Above $25M, business is fairly static, and rates are rising slightly but not to the same extent as the initial excess layer. In California and the West, most large energy contracts require wildfire coverage on at least the first $10M. Underwriters are also starting to introduce a Global Warming exclusion due to several class action lawsuits recently filed in Texas and Louisiana.

In 2021, the U.S. energy sector employed more than 7.8 million Americans. Source4


In alignment with professional and casualty lines, clean oilfield equipment placements are seeing increases of roughly 5%. This is largely intended to offset the rising cost of equipment repairs and replacements during claims, as well as increases in carrier reinsurance treaties. There is currently more competition for business outside of Louisiana as select inland marine markets have pulled out of the state and are trying to replace that lost revenue in other areas. The cost of new and used equipment is seeing a dramatic increase due to economic inflation, labor shortages, supply chain issues, and heavy demand. Because of this, agents and insureds should examine their declared equipment values and trend accordingly.

Oil Lease Property (OLP) is typically seeing small rate increases of 5%-10% on clean accounts. However, saltwater disposal wells continue to be extremely difficult to place with dramatically higher rates. This is due to ongoing losses and compounded by the London Market being far less willing to package the physical property and Control of Well together if saltwater disposal wells are present. Agents and insureds should again, analyze their declared values as OLP component costs have risen.

Overall, the Control of Well market continues to harden but not to the same extent as in 2021. Increases in 2022 may be offset if estimated drilling has increased over last year. While losses appear to be less frequent than in the past, the severity of losses has increased.

Real property will continue to be a difficult class with rate increases in the 15%-20% range, as well as any account with significant loss history. Agents can expect more dramatic increases on unprotected manufacturing if a standard market provides a non-renewal and terms can only found with E&S markets. Lastly, as the bulk of U.S. energy production is located in states with heavy named and convective storm exposure, carriers are continuing to push for increases in wind and hail deductibles as well as lower flood sub- limits, especially in Louisiana.


The business interruption/loss of production market is also seeing price increases due to U.S. losses over the last 12 months. The energy sector has worked to bounce back from the decreased production of the pandemic, but M&A activity has picked up significantly as smaller service contractors that can’t afford to keep up with larger competitors are acquired. Because the cost of materials such as pipe and steel has risen significantly, insureds also have to adjust how they track supply costs. Reporting via tonnage or the number of products sold is essential in the current environment because sales numbers alone aren’t always a true reflection of an exposure increase. Reports may show that revenue is up, which impacts rating, but it doesn’t necessarily mean a client’s exposure is greater. In reality, profit margins are currently higher for many simply because the cost of oil is over $100 per barrel.


A continued focus on disciplined underwriting means more extensive information is required to create a high-quality submission.2 Depending on the markets approached, agents may find that authority levels have been scaled back. For some, it can take 3-5 approvals to complete the underwriting process, especially if an account has experienced a loss. The authority levels on other books remain unchanged, making it crucial to know the markets well, start the renewal process 60-90 days out, and obtain as much information as possible at the beginning. Regarding professional lines, a solid submission should include annualized year-end financials for 2021, current interim financials for 2022, and a detailed list of owners and shareholders. Underwriting also wants to see debt load details, including who is owed and when the debt matures. This information ensures underwriting is comfortable with both an account’s shareholders and creditors. Casualty and property underwriters want to see a stable insurance schedule, 5-7 years of loss history, details of any significant claim, and an explanation of how the client has mitigated that risk going forward. In light of the labor shortage, submissions should also include client lists and employee resumes demonstrating that employees have adequate expertise and experience. It can also be helpful to elaborate on risk management plans around equipment maintenance, especially if maintenance schedules have been adjusted while waiting on materials or replacement parts to arrive.

In addition, Lloyds of London is looking closely at the energy business, and larger insurers are questioning if they should continue to support the oil and gas industry. Underwriting remains very focused on the Environmental, Social, and Corporate Governance (ESG) aspect of accounts and is often seeking information about how companies are reducing their carbon footprint or investing in green energy initiatives. While this can be a complex subject for clients, retailers can facilitate efficient underwriting by helping companies share important ESG details.

By 2026, global renewable energy capacity is expected to equal current fossil fuel and nuclear capacity combined. Source 1


The energy industry is strong because demand and commodity prices remain high. However, the insurance marketplace is still seeing price increases across many lines as underwriting continues to take a disciplined stance in the face of large losses, workforce shortages, and ongoing supply chain issues that impact operations. While on the contractor side rates may be down for some, because revenue is used as a rating basis premiums are typically up across the board.

The next five years will be critical for the energy industry as companies strive to maintain current business practices while moving toward a lower-carbon, sustainable future.2 With climate change, evolving consumer preferences, and rising business competition, energy sector companies will need to continue to adapt as the energy landscape evolves. This means that insurance carriers, brokers, and agents will also have to remain agile and proactive to meet the sector’s needs.2 CRC Group’s specialists have the deep expertise and expansive industry relationships you need to obtain the best possible coverage at the right price. Contact your local CRC Group producer today to learn more about how we can help your clients navigate the energy insurance marketplace.


  • Richard Martin is the President of JH Blades, a CRC Group company based in Houston that specializes in upstream energy, cargo, and marine insurance.
  • Lori Wheeler is an Inside Broker with CRC Group’s Dallas, Texas office, where she is a member of the ExecPro team specializing in executive lines, including D&O, EPL, FL, and other liability coverages.
  • Keith Richardson is an Broker with CRC Group’s Houston office, specializing in energy business.
  • Rebecca Khajeh is an Inside Broker with CRC Group’s Houston office, where she specializes in energy and habitational business.
  • Mark Sangenito is a Property, and Inland Marine Broker with CRC’s Dallas, Texas office and is an active member of the Property Practice.


  1. Renewable Energy Market Set for “Robust Growth,” Insurance Business America, June 28, 2022. bust-growth-411210.aspx
  2. Insurance Industry Keeping Up With an Energy Market in Transition, Insurance Journal, September 6, 2021.
  3. Global Oil’s Comeback Year Presages More Strength in 2022, Reuters, December 23, 2021. 23/#:~:text=U.S.%20oil%20production%20is%20expected,it%20was%20at%20in%202019
  4. U.S. Energy & Employment Jobs Report, U.S. Department of Energy added%20more,Energy%20Efficiency%3B%20and%20Motor%20Vehicles