Against the (mid)stream: LNG attracts capacity as underwriters soften stance on carbon-intensive activities

By Rebecca Delaney

April 11 - (The Insurer) – An influx of capacity into the midstream energy insurance market in the past 12 months, particularly for liquified natural gas (LNG), may indicate that some carriers are softening their positions on underwriting carbon-intensive activities. Sustainable Insurer examines this phenomenon below.

Willis’ latest energy market review said that the midstream market, particularly LNG, continues to attract big capacity, with around $150 million to $200 million added in the 12 months since the prior review.

This has fuelled further competition, with prices staying flat or reducing by 7.5% as of April 2025. Big LNG/midstream premium programs that are well-engineered saw reductions between 15% and 25%, with small market orders now well oversubscribed.

“With this comes markets' added hunger to increase their market share and really challenge income and leadership in this sub sector,” said Kieran McVeigh, head of downstream energy for Great Britain at WTW.

Speaking at the review’s launch in London earlier this month, McVeigh noted the ever-evolving nature of insurers’ positions around ESG and sustainability topics within energy portfolios.

“While most companies have robust and established ESG measures in place, there is still no consistent stance from one insurer to another,” said McVeigh.

“However, we have seen some softening in certain carriers' original positions from where they were a few years back, and now with the willingness to write accounts that they couldn't only a couple of years previously adding further competition to the market.”

He continued: “With the change of administrations around the world and the ever-moving geopolitical landscape, could there be a further change in some insurers' stance in this space? Time will tell.”

Scor’s global head of energy Michel Krenzer reflected on the “steep learning curve” that the insurance market more broadly undertook several years ago to understand the difference between scope 1, 2 and 3 emissions, as well as how to standardise the collection of data in this space.

“I'm not aware of major changes in the market on targets and commitments, but it's a question that we've had recently,” said Krenzer.

“There is some ESG fatigue, but (it’s) still an important subject. We also see big differences between U.S. and non-U.S. clients.”

With some carriers adopting more nuanced and discerning approaches to emissions-intensive activities and infrastructures, certain “hard stops” such as Arctic drilling remain firmly in place.

Midstream energy has been a greater focus of climate activists in recent months, with calls for carriers to extend underwriting restrictions to the processing, storage and transportation of fossil fuels.

For example, in February environmental campaign group Rainforest Action Network published an insurance certificate for the Calcasieu Pass export terminal in southwestern Louisiana.

The liquefaction and export facility began production in 2022, with 29 carriers named on the one-year policy, which expired last month.

However, for many of the companies featured on the slip, particularly those with smaller participations, involvement in providing coverage to Calcasieu Pass is unlikely to go against any public commitments.

Currently, many of the public underwriting restrictions are focused on upstream oil and gas infrastructure and operations, including the exploration, drilling and extraction stages.

Some oil and gas underwriting policies have certain thresholds around refusing to provide coverage to companies that generate a certain percentage of their revenue or energy production from certain fossil fuel activities.

While many of the companies on the Calcasieu Pass policy have targets around reaching net-zero emissions in their underwriting portfolios, this requires a gradual exit from business activities, often with a decarbonisation pathway that extends until 2050.

The timeline for phasing out coverage for existing risks that exceeded any internal thresholds when the underwriting restrictions were introduced will vary by company.

To date, only Generali (which was not mentioned on the Calcasieu Pass policy) has publicly committed to cease underwriting risks related to new LNG export terminals, having extended its underwriting restrictions to exclude midstream and downstream oil and gas companies and infrastructure in October last year.

There are undoubtedly environmental impacts from LNG terminals to local communities; Rainforest Action Network noted that fishing and local communities voiced their resistance to Calcasieu Pass at public hearings held by the Louisiana Department of Environmental Quality. But the role of LNG in the energy supply and the semantics of “transition” compared to “cutover” raises questions around the practicalities of the industry’s role in insuring the transition.

Companies can and will be criticised for writing business regardless of their public stance on phasing out oil and gas infrastructure, whether they have made public statements around midstream operations specifically, or whether they have grown their renewable teams to prepare for the energy mix of the future.

As the seesaw of reputation, sustainability and energy security continues to wobble, all eyes will be on the second half of the decade as interim decarbonisation targets and deadlines for phasing out clients loom.