Are you adapting to new realities?
we are starting to see encouraging signs of an economic recovery and a fightback to the virus
Welcome to our Power Market Review for 2021. Since our last Review, thankfully, there seems to be increasing light at the end of a long COVID-19 tunnel. Whilst international travel remains severely limited, we are starting to see encouraging signs of an economic recovery and a fightback to the virus with the record time development and acceleration of vaccination programmes around the world.
In the meantime, the risks emanating from the changing climate continues to accelerate in significance. During the last 12 months there have been several developments which show that the ongoing energy transition is going to have even more profound implications for both the power and the insurance industries than might have been supposed. So this year we have titled our Review “Adapting to new realities” as we think that the changes to the power industry climate risk landscape continue to evolve and grow in significance.
We continue to support a just energy transition; in doing so, we think that it is only fair to present different sides of this challenging and sensitive subject so that our readers can discern for themselves how the risk landscape in the power industry is likely to evolve during the next two decades.
We very much hope you enjoy reading the Review and as ever would welcome any comments or feedback that you may have.
We believe that in general terms the actual rate of hardening has now decreased for most lines of business from last year’s percentage rises, the pressure to keep pushing for year-on-year increases shows little sign of abating. And although it’s likely that 2020 may prove to be a profitable one in overall terms for Power insurers, we are aware of two highly significant losses already in 2021 which may impact the 2020 year of account more negatively than previously thought. Buyers will continue to need as much guidance as possible from their risk intermediaries if they are to benefit from the best terms available in what is still a challenging market.
01
Part One focuses on how the power industry is adapting to new realities in a number of specific areas. Our US colleagues have an interesting perspective on the development of microgrids as a way of meeting grid and customer needs, as well as discussing some of the lessons learned from the recent Californian wildfire and Texas freeze losses in terms of developing future grid resilience. We also look at the impact that COVID-19 is having on the various civil unrest risk inherent in the global power industry, as well as examining how countries in South East Asia are meeting the challenge of rising power demand. We also have two articles from our own climate specialists, Tony Rooke and Anna Haworth, that show how risk intermediaries can help Risk Managers play a meaningful role in helping companies navigate their way through the challenges posed by the transition – regardless of what form it eventually takes.
02
Part Two focuses on three ways in which risk intermediaries are currently helping the power industry to manage their risk and insurance agendas. we would especially like to draw your attention to CyNat, a new insurance product especially designed for the power industry which we think offers wider and more user friendly cover to the industry than that provided by either the conventional Property or Cyber markets. We also show how on-line risk engineering dashboard portals provide a range of benefits in communicating risk data and insights to the power industry, as well as outlining a recent case study demonstrating the value of using the latest analytical techniques to underpin a revised and enhanced risk management strategy.
03
In Part Three of the Review we provide comprehensive updates from the International and US markets, as well as a roundup from Beijing, Dubai, Miami and Singapore. While we believe that in general terms the actual rate of hardening has now decreased for most lines of business from last year’s percentage rises, the pressure to keep pushing for year-on-year increases shows little sign of abating. And although it’s likely that 2020 may prove to be a profitable one in overall terms for Power insurers, we are aware of two highly significant losses already in 2021 which may impact the 2020 year of account more negatively than previously thought. Buyers will continue to need as much guidance as possible from their risk intermediaries if they are to benefit from the best terms available in what is still a challenging market.
