By Michael Jones

Feb 14 - (The Insurer) - Downstream energy losses for the year-to-date are already totalling several hundreds of million dollars following two separate oil refinery fires.

The first claim is related to a fire that struck Zaro Energy's Bayernoil oil refinery in Bavaria, Germany on January 17. The cause of the fire, which was preceded by an explosion that injured four people, is still under investigation.

Two senior marine and energy market sources said provisional loss estimates are approximately $600 million. The cover placed by Marsh and led by Starr Insurance.

The second claim is in relation to a fire at PBF Energy's Martinez oil refinery in California, which occurred on February 1.

CBS reported that hydrocarbon material that leaked from one of the refinery’s process units caught fire and spread within the immediate vicinity. The fire burned for three days.

“At this time, the cost of repairs and the length of the shutdown arising from the incident cannot be reasonably estimated," the company said earlier this week.

Initial insured loss estimates for the Martinez fire suggest losses could stretch into the hundreds of millions of dollars, said two senior market sources. Aon is the broker for the cover.

This year’s two losses have added to the multi-hundred-million-dollar loss associated with a fire at Motor Oil's Agioi Theodoroi refinery in September 2024.

These losses have struck a downstream market that had settled after a number of challenging years.

Last year’s downstream treaty renewals were much more measured relative to 2023, said Miller. Capacity increased to $3.95 billion as of August 2024 compared to ~$3.75 billion at the end of 2023

2024 saw a rise in new capacity entering the downstream market through Lloyd’s and MGA operations, which increased competitive tensions within the market.

Last month, Gallagher said that 2024 had seen year-on-year rate reductions between 15% and 30% in the downstream energy market.

The broker said there was a wave of signings down at key regional renewals as markets sought to increase their income on different layers of the business to make up for shortfalls in forecast budgets.

Marsh and Aon declined to comment. Starr Insurance did not respond to a request for comment.