Pricing for various segments of the energy insurance market are dramatically different, Willis Global Energy said Tuesday in a report.

The outlook for the upstream energy market, which includes exploration and production, is “now much more positive” than that of the downstream market, which includes post-production operations through to the point of sale, the London-based energy unit of Willis Group Holdings P.L.C. said in the report, “Energy Market Review.”

While stable market conditions recently have been the norm in both markets, volatility “may soon reassert itself as we move further into 2013; while the upstream market has had an excellent 2012 in terms of premium income and loss record, the mood in the downstream market could not be more different,” according to the report.

For the downstream market, Superstorm Sandy and historically low rates have “helped to prompt a mild hardening of conditions in the market, where an atmosphere of pessimism seems to now hold sway after two poor underwriting years in succession.

“Although theoretical capacity levels continue to increase, past history suggests that if one or two leading insurers withdraw from this class others may follow suit,” Willis said in the report.

In contrast, the upstream market “has proven to be consistently profitable in recent years.”

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“While we do expect the softening in this market to continue during 2013, we anticipate that the extent of this is likely to be relatively moderate, given the continuing of the existing leadership status quo and the lack of alternative aggressive competition,” according to the report.

Meanwhile, the North American excess inability market continues to harden. “With a renewed insurer focus on pipeline operations, hydraulic fracturing and high-risk drilling as the loss record deteriorates, the outlook for this market from a buyer perspective remains gloomy,” it states.

The report also discusses that the industry continues to be faced with an increased supply chain risk. With complex exposures, “risk managers and insurers alike are finding that not enough information with regard to key suppliers is being made available,” according to the report.

“This not only prevents effective risk management strategies from being developed but also results in the coverage offered by both the downstream and the stand-alone supply chain interruption markets being somewhat limited,” Willis said.