LONDON, April 16, 2024 (GLOBE NEWSWIRE) — The energy insurance market has provided some much-needed stability amidst a period of turbulent geopolitics and economic instability. While power dynamics sway decisively in favour of buyers, a deeper examination reveals a stark divide with the emergence of a widening desirability gulf, according to the Energy Market Review published today by WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company.
Deeper insight into risk and performance data saw a homogenisation of risk appetite among carriers, with a strong drive from most markets to grow on the same, highly desirable upper tier business. This competitive pressure has the potential to impact less desirable placements, which suggests some clients will need to work with their specialist broker to continue to attract strong market support and optimum terms.
Relatively benign loss activity across all the energy sectors in 2023 saw markets return to profitability once again, with no signs of any insurers looking to withdraw from the sector. Capacity across all the energy occupancies remains abundant, albeit stabilising in most sub-sectors.
Graham Knight, global head of natural resources at WTW, said: “This widening desirability gulf between the best and the rest is great news for those clients considered upper tier as competitive pressures for this business will most likely drive softening rate trajectories throughout 2024. Conversely this is less good news for the smaller, less desirable placements which could face more of a challenge for optimum capacity.
Key findings include:
- Environmental, Social and Governance: ESG considerations are now well understood among insurers, and most carriers have adopted a partnership approach of supporting their clients through the transition in favour of applying exclusion policies.
- Energy Transition: insurers are keen to support clients with their emerging exposures generated by the adoption of transition technologies, such as carbon capture and storage, and hydrogen, and are viewing these new technologies, alongside renewables, as a key component of their future portfolio mix.
Knight added: “In 2024, risk leaders will need to consider the longer-term emerging risks on the horizon. The energy transition, geopolitical developments and the changing macro-economic environment are converging to create new risk considerations that could have a more severe impact on businesses than was previously anticipated. As the whole energy system undergoes transformation, adaptation and strategic decision making will be crucial.”
The complete report can be downloaded here.
About WTW
At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.
Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you. Learn more at wtwco.com.
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