NU Online News Service, Oct. 14, 3:57 p.m. EDT

Experts in the energy field believe insurance market pricingwill remain flat for the next 12 months despite early concerns thatthe Deepwater Horizon spill would drive prices higher.

At Chicago-based insurance broker Aon's 10^th MiddleEast Energy Conference in Bahrain, 300 energy industry experts werepolled on their thoughts concerning insurance pricing and marketdirection.

The survey found that 41 percent expect premium prices in theenergy insurance market to remain flat for the next 12 months. Anadditional 37 percent said they expect prices to declineslightly.

Aon said the results confirm the opinion of many in themarketplace that "while there was a rapid price increase in theenergy insurance market in response to the significant lossesendured by the industry earlier in the year, the effect was shortlived and previous trends have been reasserted."

The survey found that 53 percent of the respondents believe thatit would take an additional $5 billion loss in the energy market toturn around the current cycle.

In a report from insurance broker Marsh on the overall insurancemarket titled, "Insureds Net Benefits As Downward Rate PressuresPersist, Marsh U.S. Insurance Market Report 2010, Third QuarterUpdate," the broker said "Energy accounts and risks with pollutionexposures may be underwritten more closely as a result of theDeepwater Horizon event."

The broker further observed that, barring "market-changingevents," the umbrella and excess market would likely remain stableinto next year.

Attempts at rate increases may come from incumbent leadcarriers, Marsh noted, and could be successful in markets wherethere is little competition "for the risk class or attachmentpoint."

The broker further pointed out that flat premiums shouldtranslate into rate decreases as insureds purchase additionallimits "due to the abundance of capacity and the relatively lowprice in those layers."

In the Aon survey, one thing that concerns energy experts iscompany ratings. This is a key issue for everyone in the sector,Aon said, as 37 percent of those surveyed said they saw it as themost important factor in their choice of insurance partner.

Technical capability was the second most important factor at 26percent of those surveyed. Competitive pricing was also asignificant concern among 23 percent.

Latif Alrayes, chairman and chief executive officer of Aon inthe Middle East, said in a statement, "While the energy industryhas weathered many storms over the past few years, barring anydisastrous losses, the industry should be able expect flat or evendeclining insurance premiums over the next year. This shouldprovide the sector with a level of relief and certainty aroundtheir operations and investments."