The onshore and offshore energy construction industry is relatively quiet at present, and the insurance market covering it is facing downward pressure on rates for the rest of this year, according to a report by Marsh UK.

In its latest energy market report, Marsh says low claims activity and increasing insurance capacity from the first half of 2009 will push prices lower.

A hardening of the offshore construction market had been anticipated as a result of substantial losses last year.

Energy construction broking specialist Paul Nicholson says basic supply and demand rules will undoubtedly come into play in the second half of 2009.

“Underwriters are behind on their premium budgets with little investment income to supplement their cashflow, meaning that we should expect increased competition for risks that are considered non-catastrophe exposed,” he said.

“There remains a lack of large onshore construction project flow in the markets, caused by delays in projects obtaining final investment decisions.”