Insurers were busy trying to stay ahead of the curve when it comes to creating products for the top markets in 2014, and they don’t seem to be slowing down this year either. Read on for "Part Two" of what some believe will be the top markets of 2015 and why.

ENERGY

If 2014 was any indication, underwriters have big plans for the energy market in 2015. In fact, a few companies have already rolled out new products and additional capacity to this dynamic segment.

Insurers are expecting big growth from energy industries in the coming years and are looking to catch some of the new business that will come from that growth.

“According to the U.S. Census Bureau and the Energy Information Administration, U.S. natural gas production will rise an estimated 44 percent over the next 30 years and non-hydropower renewables will increase by 4.1 percent in 2014, which are clear indicators of industry-wide growth,” said Mary Hughes, president of Construction/Energy for ProSight Specialty Insurance, which launched three insurance programs for solar energy contractors, propane and fuel dealers, and oil and gas contractors last May.

Hughes said ProSight views growth in the energy segment as an opportunity to partner with businesses and offer options beyond what is provided by standard line insurance companies.

However, underwriters say this class isn’t for everyone.

“Power is one of the fastest growing segments in the U.S.,” according to Tom Fitzgerald, CEO of Aon Risk Solutions’ U.S. retail operations. “Between rapid expansion and growth, legislative, regulations and supply chain complexity, power and utility operators need a partner with an intimate understanding of the unique risks they face every day.”

Mark Fishbaugh, practice leader for Aon Risks Solutions, spoke with Insurance Journal’s sister publication Claims Journal last year about the fact that the energy segment creates a very complex underwriting process that requires industry-specific expertise. All new entrants are not created equal.

“You have to have the loss engineers, claims handling experts and loss prevention services to understand this risk well,” said Fishbaugh. “When you develop something new, the less history you have on it, the greater you have for the uncertainty of loss in the short-term and the long-term.”

Companies weren’t deterred by the complexity last year as they hired additional energy specialists, expanded energy capacity, and added new market products, including:

  • Ironshore Energy Property increased its capacity for worldwide energy risks to $25 million in March 2014. The additional capacity is available across all classes within the energy sector including refineries, petrochemical plants, chemical plants, gas plants, pipelines, terminals, mining risks, alternative energy, power utilities, basic metal, and pulp and paper facilities.
  • PartnerOne Environmental and ACE Westchester partnered to offer a packaged insurance product specifically for environmental contractors and consultants. The new product called PartnerOne Energy Select was designed for those insureds providing support operations and services in the oil and gas industry.
  • Swett & Crawford formed a partnership in September with coverholder and MGA JH Blades, which underwrites onshore and offshore upstream energy business. Richard Martin, Swett & Crawford’s Energy Practice Group Leader, said the addition of the brokerage team will allow it to “expand the energy brand to include midstream, downstream and renewable energy business for our carriers, retailers, and internal brokers.”
  • In November, CNA made several senior appointments to the Energy, Marine and Aviation team of its London-based indirect subsidiary Hardy Limited.
  • Energi and HDI-Gerling America entered into a multi-year agreement to extend their risk management and insurance programs to certain segments of the U.S. downstream, midstream and upstream energy markets.
  • Worldwide Facilities Inc. formed a strategic partnership with Canopius and Beazley Lloyd’s of London Syndicates to provide an underwriting platform for land-based oil and gas lease operators in May. The company said at the time it is working on a number of new programs for the marine and energy industry.

And so far this year there appears to be no sign of a slowdown in this segment as three big energy players have already made moves:

  • JLT Specialty Insurance Services purchased part of Alliant Insurance Services energy business in October and added five specialists to its Houston-based energy risk team earlier this month. The additions are part of the company’s plans to significantly expand its capabilities in the energy space.
  • Global Special Risks, part of Ryan Specialty Group, launched a new binding authority facility backed by Lloyd’s gas and energy underwriters for its upstream energy program. The Upstream Solutions Energy Package provides products for oil and gas operators and non-operators of North American-based exploration and product companies.
  • Berkshire Hathaway Specialty Insurance (BHSI) lowered its minimum policy premium from $100,000 to $50,000 and added deductibles ranging from $5,000 to $50,000 for a variety of eligible U.S. and Canadian casualty risks, including energy. The company says this move is part of BHSI’s expansion of its casualty appetite.

Check back Monday, Jan. 27 for Part Three of the “Top Markets to Watch in 2015″ series. (Read Part One)