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Amid a changing macro-economic landscape and with environmental, social and governance (ESG) considerations becoming ever more influential Gallagher has been adapting its energy insurance offering to our clients and energy operators. This market update outlines market conditions and our response to fulfilling changing and varied client requirements.
With the overall insurance market moderating since the first half of 2021, the forces of inflation, increased values in property and business interruption, the ongoing Russia/Ukraine conflict and supply chain disruptions continue to dominate concerns for insurance for the first-half of 2022.
The report covers sectors across energy in upstream, midstream, downstream, power and renewables, as well as casualty and ESG considerations for energy operators as boards of energy businesses come under increased pressure from investors, policymakers and other stakeholders to mitigate negative environmental impacts.
Cyber risks and building resilience and implications for director and officers' liability are also featured, given the growing risks and insurance focus on these areas in the energy industry.
Download the full Global Energy Insurance Market report, June 2022
Upstream — how energy clients may see varying rate rises, determined by risk type, with businesses with large-scale assets and good loss records more likely to see some rate reductions.
Midstream — increased capacity for risks means rate rises are relatively low; and we highlight an increase in opportunities around projects such as carbon capture and storage (CCS).
Downstream — underwriters are still focused on natural catastrophe exposures, which are subject to higher premium rates, but in some sectors high and stable capacity is helping to limit rate rises, although underwriters are tightening terms and conditions for some risks.
Power — we have seen only modest increases in rates, due in part to wider trends, new capacity and greater competition. With the Lloyd's directive on underwriting new coal business we also look at the approaches taken by some syndicates in working with coal clients that can demonstrate they are working towards transition to renewable energy.
Renewables — while the renewables insurance market is becoming more stable we also examine trends that need to be monitored, including the effect of unpredictable global weather patterns on projects in locations with high natural catastrophe exposures, underwriter uncertainty over some new technologies and supply chain disruption.
Casualty — we also look at both North American and international energy casualty risks, where strong capacity and the impact of new entrants are helping lower costs, but the effects of inflation and the potential consequences of litigation related to nuclear power may create problems.
Access our international resources and local expertise from our market-awarded energy specialist team in Australia. Download the report to take advantage of their expert market and risk insights into energy market trends to inform forward planning of your insurance needs.
Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient's industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers' control.
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