Global Downstream Update 2023

Significant deterioration of 2022 loss figures but there is light on the horizon

As reported in our April Energy Market Review, in 2021 and 2022, we saw major losses in the market, mainly in oil and gas but also in the chemical and midstream space. This ultimately affected both the downstream market and those upstream insurers who write midstream risks. Over the course of this year, 2022 loss reserves have deteriorated significantly and our database now records in excess of US$8 billion in losses for 2022. This deterioration is primarily due to the reduced or delayed access to sites for loss adjustors, either due to a knock-on effect of COVID-19 or because local authorities shut down sites immediately following a loss. As a result, loss adjustors cannot access sites to fully quantify losses until after the location is released by local authorities, which is causing meaningful delays in loss quantification and consequently less accuracy in insurer's initial reserves.