The global property insurance market in the oil and gas sector was valued at $14.171 billion in the year 2015 and is expected to grow at a CAGR of 3%, by 2020, says Technavio.
Technavio has announced its latest market research report on property insurance to its oil and gas portfolio. This market analysis discusses the major drivers and key emerging trends that will influence the growth of the global property insurance market in the oil and gas sector during the forecast period 2016-2020. Some of the top vendors listed in this industry analysis include Allianz, American International, Aon, Marsh and Willis-Tower Watsons.
In terms of geographical analysis, the Americas will be the fastest growing region in the global market by 2020, accounting for around 39% market share. The US, Canada, and Mexico are the key revenue generators in this region. The US is the largest insurance market in the world and constant demand from Canada and Mexico will further augment the growth prospects for the market in this region over the next four years.
“One of the latest trends gaining traction in this market is the emergence of engineering services. Over the years, the insurance companies have developed teams of engineers and technically experienced professionals who have a thorough knowledge of the processes. The companies utilize these professionals in the ascertaining of the risks of the facilities. It helps them to make better-informed underwriting decisions,” says Thanikachalam Chandrasekaran, a lead analyst at Technavio for research on oil and gas.
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Increased risks due to shifting bases of exploration
Reduced rate of drilling operations in the established areas such as the Middle East, Gulf of Mexico, and North Sea areas have led several energy companies to shift to areas like the Yamal basin in Russia, the Andaman Sea in the Indian sub-continent, and the Arctic and Antarctic region. In the absence of enough data in the actual operations, more importance is given to the risk management of operations. With the sudden shift of the drillers and operators into these uncertain avenues, the risk of losses has increased considerably, subsequently driving the need for property insurance in the oil and gas domain.
Enforcement of strict regulations
The insurance sector has some strict regulations which the operators must abide by. Since the risk is high in the insurance sector, the premiums are also high and with each year the premiums have an effect on the profit margins of the vendors. This has led many small oil and gas companies to not opt for insurance cover costs, leading them to financial instability. To avoid such risks, most of the companies are availing insurance facilities in the oil and gas sector. The importance of insurance is clearly driven from the fact that the oil and gas industry carries with them huge environmental risks. With the oil and gas sector coming under vigilant eyes, the regulations are expected to be stricter in the coming years. Such risk factors will necessitate the availability of property insurance in the oil and gas sector in the future.
Need for hedging expensive oil and gas assets
With the oil and gas industry being highly active and sensitive, the equipment used are quite expensive. Owing to the extremely hazardous operations within this sector, the value of the oil and gas facilities has to be high. It becomes difficult for most of the oil and gas companies to buy some or the other insurance covers to hedge against the losses. Irrespective of the size of the company, a blowout or large fire can mean loss of millions of dollars, besides the high clean-up expenses. Such liabilities have prompted several oil and gas companies to opt for insurance covers.
Some of the other prominent vendors identified in this report are XL Caitlin, Liberty Mutual, Intact Insurance, Travelers, Cravens Warren, ACE, Empire Company, Jardine Lloyd Thompson, Heirs Insurance Brokers, AON Benfield, Osprey Insurance Brokers, Paragon Insurance, and Starr Tech.
This research report includes an in-depth analysis and market shares and sizes of the sub-segments and geography. It provides a comprehensive analysis of the key companies, including their market shares, business overview, key financials, etc. The market study also offers a detailed analysis of key drivers, challenges, and opportunities influencing this market.
A more detailed analysis is available in the Technavio report titled, ‘Global Property Insurance Market in the Oil and Gas Sector 2016-2020‘. Technavio also customizes reports by other regions and specific segments upon request.
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