2026 Natural Resources mid-year state of the market

Six months into 2026, the soft-leaning conditions described in our January State of the Market have not only persisted but deepened across most energy-adjacent classes. The commercial property and casualty market saw an average rate decrease in premiums across all account sizes of 1.2%, with U.S. property rates down 7.1%.¹

Overview

The energy insurance market at midyear 2026 is best characterized as deeply soft, with abundant capacity and continued participation from new market entrants supporting competitive conditions across the class. Mining has followed a similar trajectory, with healthy capacity, competitive underwriting, and favorable pricing for well-managed operations. Beneath the favorable buyer environment, several countervailing forces are accumulating.

Downstream energy losses remained elevated throughout 2025, particularly across U.S. refining, increasing underwriting scrutiny despite continued abundant market capacity. Mining tailings exposure remains a structural concern, with the World Mine Tailings Failures database forecasting 13 catastrophic failures between 2025 and 2029, and the November 2025 UK High Court ruling on BHP’s Samarco liability extending standard-of-care expectations across jurisdictions². U.S. casualty remains an outlier within an otherwise softening global picture, with rates up 8%, driven by persistent severity in excess layers and continued social inflation³.

The midyear posture for buyers is favorable, but not unconditionally so. Capacity is abundant, and terms are broadly negotiable. Well-engineered accounts can capture meaningful rate, coverage, and structural improvements. However, the market’s sensitivity to a single significant loss event — whether a refinery incident, a major tailings failure, a Gulf Coast hurricane, or a Middle East operational disruption — has grown rather than diminished. The speed of any potential correction would likely outpace the deliberate pace of the current softening.

As organizations navigate abundant capacity alongside evolving operational, geopolitical, and catastrophe-driven risks, strategic insurance planning remains essential. The Baldwin Group’s Natural Resources Practice helps clients evaluate changing market conditions, strengthen risk differentiation, and align insurance strategies with the operational realities of energy, power generation, mining, marine, and digital infrastructure.

Market context

Competitive conditions favor well-managed risks

The aggregate picture across the energy-relevant classes for Q1 2026 is consistent: capacity oversupply is driving competition across every region except the U.S., where casualty severity is the primary offsetting pressure. Competition among insurers, new market entrants, and healthy reinsurance support continue driving pricing improvements, though underwriting differentiation has become more pronounced as insurers reward strong operational performance and risk quality.

Capacity and rate movement

• Global conditions – The P&C market is shifting toward normalization. Global gross written premiums grew 3.8% in 2025, down from 8.5% the prior year, with North America slowing to 2.2% while Western Europe grew 5.3% and Asia 4.0%.
• Property-led softening – Commercial property has seen significant softening, with U.S. commercial property rates declining an average of 7.1% in Q1 2026. The commercial property loss ratio improved from 87.9% in 2024 to 85% in 2025, supported by favorable reinsurance renewals, disciplined underwriting, and strong premium adequacy despite catastrophe activity.
• New market capacity – New entrant capital continues to enter the upstream and renewable energy segments, with broker facilities and MGA platforms adding meaningful capacity to traditional insurer markets.
• Reinsurance support – Reinsurance capital remains abundant following a benign 2024 to 2025 CAT loss period, with mining specialty markets in particular seeing growth across both risk and catastrophe layers.
• London market – Lloyd’s and the broader London market remain the primary engine for complex energy and natural resources placements, with continued willingness to extend line sizes on well-managed risks.

Underwriting differentiation

• Risk quality – The gap between strong and weak risks continues to widen. Insurers are deploying capital aggressively against accounts with clear risk engineering, modern equipment, current third-party inspections, GISTM-conformant tailings management (in mining), and documented loss-control programs.
• Operational discipline – Accounts with deferred maintenance, aging equipment, or incomplete underwriting information are seeing a narrower range of pricing improvements and, in some cases, tighter coverage terms.

Although market conditions remain highly favorable, underwriting discipline has not disappeared. Organizations that continue investing in engineering, maintenance, and operational controls remain best positioned to capitalize on abundant capacity while differentiating themselves as the market evolves.

Current trends

Renewable energy

The renewable energy market has continued to soften through the first half of 2026, with new market entrants and lower NatCAT reinsurance costs sustaining competition. The global renewable energy insurance market is sized at approximately $20.1B in 2026 and projected to reach $28.4B by 2031, with North America the fastest-growing region⁴. Insurers remain aggressive on clean, well-engineered risks, with higher line sizes, particularly in London, and broader coverage continuing to be available.

Project design and underwriting

• Battery energy storage systems (BESS) – The battery energy storage system (BESS) market has been the most actively re-underwritten segment this year. Following the January 2025 Moss Landing fire, which generated an estimated $500M in insured loss and remains under industry analysis, insurers are meaningfully differentiating between project designs.
• BESS capacity constraints – Indoor BESS retrofits face material capacity constraints. Containerized outdoor installations with appropriate spacing, NFPA 855-compliant detection and suppression, proven chemistry, and documented fire authority coordination continue to attract competitive terms. Thermal runaway failure rates have declined approximately 99% on a per-GWh basis between 2018 and 2025, and underwriters are distinguishing between modern containerized projects and legacy designs when pricing risk⁵.

Renewable generation

• Solar – Solar remains under close watch for hail-driven losses in the Midwest and wildfire exposure in the western U.S., with some insurers reducing aggregate limits or enforcing peril sublimits in California. Hail damage has been the dominant solar attrition driver, prompting developers to elevate deductibles, deploy stowing strategies, and increasingly explore parametric products as supplemental coverage.
• Wind – Wind continues to benefit from operational maturity and clear loss patterns. Offshore construction remains tighter, with subsea construction operating as a micro hard market within the broader softening environment.

Coverage and financing strategies

• Tax credit insurance – Tax credit insurance continues to expand as a meaningful adjacency for renewables placements. Following finalization of the One Big Beautiful Bill Act in mid-2025, transferable credits under §45Y, §48E, §45Q, and §45Z are being placed with increasing frequency, with tax credit insurance pricing in the 200bps to 400 bps range over the credit stream⁶. Coordination between property and BI placement and tax credit recapture coverage is becoming a standard requirement for sophisticated developers and project sponsors.

Next-generation technologies

• Emerging technologies – Emerging transition technologies — including hydrogen production and storage, carbon capture and sequestration, and biomass-to-fuels — continue to attract underwriter interest, but with narrower capacity and more rigorous engineering review than mainstream renewables. Developers should expect detailed scrutiny of process safety, vendor experience, and contractor selection on first-of-kind deployments.

While market conditions remain favorable for established renewable technologies, underwriting continues to differentiate based on project design, engineering quality, and operational maturity. Organizations that can demonstrate strong risk controls and proven technologies remain best positioned to secure competitive capacity and coverage.

Traditional energy

The traditional energy insurance market continues to benefit from abundant capacity, particularly for upstream operations, where strong profitability and new market entrants are sustaining favorable conditions. While competition remains robust across much of the sector, downstream losses, casualty trends, and statutory offshore coverage continue creating areas of underwriting discipline.

Upstream market conditions

• Record capacity – The upstream oil and gas insurance market is at record capacity heading into the second half of 2026, supported by continued new entrant interest. Upstream profitability has remained strong through 2025 and into 2026, and underwriters are competing aggressively for clean, well-managed accounts.
• Pricing trends – Double-digit rate reductions on the largest accounts are routine, with insurers using single-digit reductions on small-to-medium accounts as a portfolio-stabilizing mechanism. Subsea construction capacity remains tight relative to demand, creating a localized hard pocket within an otherwise soft class.

Downstream market conditions

• Downstream losses – The downstream market diverges sharply, with elevated loss activity throughout 2025 largely concentrated in U.S. refining operations. These losses have increased underwriting scrutiny for downstream operations despite continued insurer competition and abundant market capacity.
• Pricing trends – Despite significant loss volume, pricing has not materially corrected. Capacity oversupply has absorbed loss activity rather than triggering a rate response. Current pricing is disconnected from underlying risk, with loss severity remaining insufficient to counteract broader industry capital oversupply.
• Casualty pressures – Casualty markets remain relatively stable outside the U.S., while U.S. casualty continues to be the global outlier as persistent excess severity and social inflation sustain underwriting discipline.
• Umbrella placements – Lead umbrella stretches have remained compressed at approximately $5M to $10M, well below the $25M stretches available in prior cycles.
• OPA 90 – OPA 90 capacity continues to be constrained, with London remaining the primary source of statutory offshore coverage and pricing remaining elevated.

Midstream market conditions

• LNG and midstream activity – LNG and midstream activity has grown under the current administration, driving increased submission volume across liquefaction, export, and pipeline projects. Insurer appetite remains strong but disciplined, with focus on engineering quality, contractor selection, and CAT exposure.
• Business interruption – Buyers should review business interruption declarations given commodity price volatility to help ensure full recovery on event-driven claims.

Entities with strong engineering, disciplined maintenance, and well-managed operations are best positioned to capitalize on favorable market conditions and navigate areas of continued underwriting scrutiny.

Conventional power generation

The conventional power generation insurance market — covering gas-fired, coal-fired, and nuclear assets — has continued to benefit from the broader soft conditions in the energy and property segments, with abundant capacity for well-managed risks. Combined cycle gas turbine (CCGT) and simple cycle assets account for the bulk of new build activity and renewal volume, supported by an unprecedented increase in OEM order books from data center and AI compute demand.

The global gas turbine market was valued at approximately USD 30.24 billion in 2025 and is projected to reach more than USD 32.5 billion in 2026, growing at a CAGR of 7.29% through 2035. Combined cycle configurations accounted for approximately 74% of the market in 2025, and five OEMs — GE Vernova, Siemens Energy, Mitsubishi Heavy Industries, Baker Hughes, and Ansaldo Energia — collectively represented approximately 87.5% of global market share⁷. While market conditions remain favorable, insurers continue placing greater emphasis on engineering quality, equipment condition, and project execution as generation assets expand and age.

Operational power generation

• Well-managed assets – Accounts with current critical component inspections (borescope, transformers, etc.), documented long-term service agreements (LTSAs) with the OEM, and third-party inspections on balance-of-plant equipment are seeing high single-digit rate reductions, with structural improvements available on deductibles, indemnity periods, and contingent BI extensions.
• Aging infrastructure – Older units face more rigorous underwriting scrutiny, particularly the meaningful portion of the U.S. CCGT fleet now approaching or beyond 20 years of service against a typical 25-year design life. Underwriters are closely evaluating fatigue, creep, flow-accelerated corrosion, and stress corrosion cracking exposure, while routinely excluding wear-and-tear, corrosion, and deterioration losses that fall outside the “sudden and accidental” trigger. As a result, robust inspection regimes have become a material factor for coverage outcomes.

New generation development

• CCGT construction – New build CCGT activity remains at multi-year highs as data center demand drives generation expansion. FERC reported approximately 4.2 GW of new natural gas capacity added during the first 11 months of 2025 and identified 44.9 GW of proposed natural gas projects through 2028, including 22.7 GW considered high-probability additions.⁸
• CAR and DSU placements – Construction All Risk (CAR) and Delay in Start-Up (DSU) placements on these projects are benefiting from competitive capacity, though OEM order books extending into 2029 to 2030 for major frame gas turbines have introduced supply chain timing and DSU sub-limit considerations.
• Mobile generation – Mobile and aeroderivative units are gaining traction for data center bridging power and ERCOT/PJM scarcity response, representing a fast-growing sub-segment with strong insurer appetite.

Alternative risk transfer

• Parametric solutions – Forced outage parametric products have emerged as a complementary risk transfer mechanism for merchant CCGT operators in scarcity-priced markets (ERCOT, PJM, MISO). These index-linked products respond to NERC GADS-coded outages during periods when day-ahead and real-time price spreads create financial loss for operators. Specialty markets have written meaningful volumes as interest continues to grow.

Nuclear and coal

• Nuclear generation – Nuclear has returned to active conversation in the power generation insurance market, driven by data center demand for carbon-free baseload power. Restart, uprate, and small modular reactor (SMR) projects are generating early-stage submission activity, with capacity from the nuclear pools — American Nuclear Insurers (U.S.), Nuclear Risk Insurers (UK), and MAEM (continental Europe) — supplemented by specialty markets willing to write SMR construction phases.
• Nuclear program design – These projects require coordinated program design across property, liability (Price-Anderson), business interruption, and nuclear-specific coverages outside the standard energy market. Behind-the-meter colocation deals, including Talen-Amazon and Constellation-Microsoft, continue navigating regulatory and FERC review that directly affects program structure.
• Coal-fired generation – Coal-fired generation continues to face capacity constraints, but less so than in prior periods. Operating coal assets in well-managed regulatory environments can still secure adequate program structures, though at materially higher relative cost than gas-fired alternatives.

Data center expansion continues reshaping the conventional power market. As generation assets age and new projects come online, insurers will continue placing greater emphasis on documented equipment condition, long-term maintenance planning, and disciplined asset lifecycle management.

Digital infrastructure

Digital infrastructure remains the single largest demand driver across energy and power markets at midyear 2026. Global data center demand may almost triple between 2025 and 2030, from about 82 gigawatts to about 220 gigawatts.⁹ In the U.S., data centers could double their current share of U.S. power by 2030, consuming 9% to 17% of electricity generation, with behind-the-meter (BTM) generation now accounting for more than 25% of new data center capacity.¹⁰ Texas leads behind-the-meter generation development with more than 30 GW of announced capacity, followed by New Mexico (9.2 GW), Pennsylvania (7.5 GW), Utah (6.0 GW), Wyoming (3.3 GW), and West Virginia (2.0 GW).¹¹

FERC and ISO queue economics — including non-refundable readiness deposits in PJM at $4,000/MW and interconnection lead times exceeding six years in some markets — continue pushing hyperscale developers toward on-site generation rather than grid interconnection. These market dynamics are driving greater underwriting differentiation, particularly around facility design, power infrastructure, cybersecurity, and site selection.

Market capacity

• Risk differentiation – Capacity for data center risk remains strong, but underwriting differentiation has widened between FM Global HPR-eligible builds engineered to FM Data Sheet specifications and more variable middle-market construction.
• AI and HPC infrastructure – AI and HPC deployments with 50 to 100+ kW per rack and liquid cooling infrastructure are commanding more rigorous risk engineering, reflecting both higher total insured values per square foot of IT load and the asymmetric loss profile associated with liquid cooling failures, water damage, and refrigerant leaks.

Cyber and aggregation risk

• Cyber underwriting – Cyber underwriting scrutiny has intensified for large grid-connected and BTM-co-located campuses, with insurers focused on cyber-physical exposure, supply chain security, and incident response protocols.
• Risk aggregation – Aggregation concerns are growing as multi-gigawatt clusters become more common in Texas, Virginia, and the Northeast.
• Catastrophe exposure – Sites in catastrophe-exposed regions, including Gulf Coast hurricane exposure, California seismic and wildfire, and Midwest hail, continue to face heightened scrutiny around construction standards, hardening, and limits adequacy.

The pace of digital infrastructure investment continues accelerating, but underwriting expectations are evolving just as quickly. Engineering quality, cyber resilience, and location-specific risk will remain central to securing competitive capacity and coverage.

Marine

The marine insurance market remains fundamentally stable, but geopolitical conflict, shifting global trade patterns, and evolving vessel technologies continue influencing underwriting priorities. While overall capacity remains healthy across most marine classes, insurers are paying closer attention to accumulation risk, emerging technologies, and changing operational exposures.

Hull rates continue declining faster than average, cargo rates remain flat to down 5%, P&I rates are up 10%+ on continued loss development, and marine liabilities are increasing 2.5% to 5%.

Market conditions

• Pricing trends – Lloyd’s recorded its first aggregate price reduction since 2017, down 3.7% in 2025. Ports and terminals are seeing property reductions of about 10% and liability reductions of up to 5% for well-managed risks. P&I mutuals hold their strongest balance sheet position in over a decade, though rates are rising as the IG-wide 2024/25 result reached approximately 110% on a financial-year basis and 120% on a pure policy-year basis amid record pool claims. Marine liability is the primary outlier, constrained by the Dali bridge collapse and U.S. legal system abuse exposure, though clean accounts are increasingly renewing near flat.¹²
• Capacity trends – Capacity remains healthy across hull, ports, terminals, and cargo classes, while offshore energy and OPA 90 represent tighter areas of the market.

Geopolitical and trade pressures

• Conflict risk – Middle East conflict has been the most material development affecting marine exposures in 2026, triggering sharp increases in war risk premiums and altering coverage boundaries through the Red Sea, Gulf of Aden, and Persian Gulf transit corridors.
• Trade volatility – Tariff-driven trade volatility continues reshaping cargo flows, altering accumulation patterns, and increasing operational variability across major shipping routes. Port congestion and rising vessel valuations have intensified underwriting focus on aggregation exposure.

Fleet modernization

• Alternative propulsion – Alternative propulsion vessels, including LNG, methanol, ammonia, and dual-fuel designs, continue to enter service in growing numbers. While these represent positive long-term risk profile improvements, the performance and maintenance characteristics of new propulsion technologies remain under careful underwriter evaluation.
• Cyber exposure – Cyber exposure across connected vessels and port infrastructure remains an important underwriting focus. Navigation systems, operational technology, and port connectivity continue expanding the potential for cyber incidents to disrupt operations and cargo movement.

Although overall market conditions remain stable, geopolitical developments, evolving vessel technologies, and changing trade patterns continue reshaping marine risk. Organizations that monitor these developments and adapt their risk management strategies will be better positioned as underwriting priorities evolve.

Mining and metals

The mining insurance market remains materially softer than the broader energy class through midyear 2026. Significant rate reductions continue for well-managed property damage and business interruption placements, while international liability insurers remain competitive on price. Healthy capacity across specialist and non-specialist mining insurers has been supported by an influx of reinsurance capital across both risk and catastrophe layers. Despite these favorable conditions, several technical mining markets have publicly reached walk-away points on rate adequacy and are willing to lose renewals rather than absorb further reductions.

Underwriting continues evolving beyond broad market conditions, with insurers differentiating based on commodity exposure, tailings governance, geotechnical risk, and environmental management practices.

Commodity-specific underwriting

• Critical minerals – Underwriting scrutiny has become commodity-specific. Precious metals operations command favorable terms supported by sustained pricing, while copper, lithium, nickel, and rare earth element operations benefit from energy transition demand fundamentals and active insurer competition.
• Coal operations – Coal operations continue facing more limited insurer appetite despite shifting global sentiment, though some insurers that previously exited the market are re-engaging and expanding line sizes for well-managed risks.

Tailings and geotechnical risk

• Tailings storage facilities (TSFs) – TSFs remain the dominant structural underwriting concern across the class. The Global Industry Standard on Tailings Management (GISTM) is now a baseline expectation for underwriters, with the International Council on Mining and Metals (ICMM) reporting 67% of member facilities at full conformance as of November 2025.¹³ Operations without a GISTM conformance commitment face heightened scrutiny, narrower capacity, and in some cases outright tailings exclusions.
• Governance expectations – The November 2025 UK High Court ruling on BHP’s liability for the 2015 Samarco failure established that failing to meet tailings management standards of care can constitute negligence across multiple jurisdictions, raising the bar on documented governance, third-party surveys, dam break analyses, and integration of tailings risk into capital allocation.
• Heap leach facilities – Heap leach facilities are under heightened scrutiny following the 2024 Çöpler (Turkey) and Eagle Gold (Yukon) failures — nine fatalities in the former, receivership for the operator in the latter.¹⁴ Several insurers have introduced leach pad exclusion clauses, and underwriting requirements now closely mirror tailings expectations: geotechnical assessment, design review, third-party surveys, and ongoing monitoring documentation.

Emerging underwriting priorities

• Operational risk – Beyond tailings and leach pads, tightening scrutiny extends to mining-induced and natural seismicity, extreme rainfall flooding, hot work controls after recent procedure-related fire losses, and ESG-driven capacity withdrawals. Extreme rainfall has emerged as the sector’s most impactful natural hazard, and seismicity is driving new exclusions and stricter underwriting in affected regions.
• Environmental liability – Pollution policies have moved from package endorsements to standalone placements in many cases, with a broad pricing range depending on commodity, geography, and operator history. Significant dedicated limits are now available for environmental liabilities.
• Directors and officers liability – D&O exposure tied to tailings governance has been a recurring claim driver, prompting tailings exclusions, sub-limits, and quote declinations on some D&O programs.

Alternative risk transfer

• Parametric solutions – Parametric structures continue gaining traction as a complement to traditional placements, particularly for weather-dependent commodities such as lithium and salt. Weather-triggered parametric products are increasingly used to address non-damage business interruption from rainfall, drought, and temperature events.
• Captives – Captive utilization is also expanding, particularly in Latin America where environmental liability and political risk exposures are driving formation activity.

What to watch

• Evolving loss trends – The structural caution at midyear 2026 is that conditions for aggressive correction can quickly materialize. A major tailings failure, multi-fatality underground event, or high-profile ESG-driven incident may trigger rapid hardening in a class where capacity has expanded faster than loss experience justifies.
• Market strategy – Buyers should use current market conditions to lock in long-tenor terms where available and to invest in risk engineering and tailings governance that will pay dividends through the next cycle.

As market conditions continue softening, underwriting has become increasingly focused on the factors that distinguish long-term operational resilience, from commodity exposure and tailings governance to environmental liability and alternative risk financing.

Outlook for H2 2026

The second half of 2026 will be shaped by several developments with the potential to alter the current soft-leaning market trajectory. While favorable conditions are expected to continue absent a significant loss event or geopolitical disruption, buyers should continue monitoring catastrophe activity, geopolitical developments, and casualty trends that could quickly reshape underwriting conditions.

Potential market catalysts

• Atlantic hurricane season – The 2026 Atlantic hurricane season is forecast above average, and Gulf Coast energy and power infrastructure remains the largest single CAT aggregation in the global property market. A major landfall affecting producing assets, refining, LNG, or coastal data center development could materially reset rate expectations.
• Geopolitical disruption – Middle East operational disruption, whether through direct conflict affecting hydrocarbon infrastructure or broader supply chain consequences, is an important watch item for both energy and marine classes.
• Major loss events – A meaningful BESS, tailings, or downstream refining loss event during the second half of the year could become the catalyst that converts today’s pricing environment into a broader market correction.
• U.S. casualty pressure – U.S. casualty severity remains the wildcard across every class with U.S. exposure, as social inflation, nuclear verdicts, and litigation funding continue driving loss severity at excess layers.

Strategic priorities

• Risk engineering – Buyers with strong risk profiles, current third-party engineering documentation, GISTM- and FM-compliant operational practices, and disciplined contractor and OEM relationships will continue capturing the most favorable terms.
• Program optimization – Review business interruption declarations in light of commodity price volatility, evaluate captive and alternative risk transfer structures where retention capacity supports them, and use the current capacity environment to secure coverage breadth and limit adequacy that may become more difficult to replicate when market conditions change.

The second half of 2026 presents an opportunity to move beyond favorable market conditions and strengthen the strategies that support long-term resilience.

Turning insight into action

As the energy and natural resources landscape continues to evolve, having an experienced insurance partner is essential to safeguarding assets, protecting earnings, and supporting long-term resilience. The Baldwin Group’s Natural Resources Practice brings recognized expertise across energy, power generation, mining and metals, marine, tax credit insurance, and broader risk management, helping organizations navigate complex risks with integrated, engineering-driven solutions.

Your dedicated team supports:

• Property and casualty placement across renewable energy, traditional oil and gas, conventional and nuclear power generation, digital infrastructure, mining and metals, and marine
• Tax credit insurance and §6418 transfer support under the post-OBBBA framework
• Complex construction and project risk shaping beginning at the contract stage
• Warranty-linked subrogation and MFL-rationalized program design
• Parametric and alternative risk transfer structures tailored to evolving operational exposures
• Access to specialty insurance markets across the U.S., London, Bermuda, and continental Europe.
• Engineering-driven risk evaluation with integrated tax credit, financial, and risk transfer structuring to design programs that reflect the underlying risk rather than precedent placements

The strongest insurance programs are built long before market conditions change. Organizations that take a proactive approach to engineering, governance, and program design are better positioned to strengthen resilience and adapt as risks evolve. The Baldwin Group’s Natural Resources Practice helps organizations translate those strategies into insurance programs designed to support long-term success.