In this article from the 2024 Power Market Review, understand how power liability buyers can capitalize on market stability, softening rates, and emerging risk trends.
Climate
Climate Risk and Resilience
Following a relatively benign year for loss activity, rating pressure in the international liability market has continued to soften, but power companies will need to address key trends to build longer-term resilience.
The international liability market has stabilized with a small uptick in capacity and softer market conditions, leading to greater competition and downward pressure on rates.
Power liability market trends to watch in 2025
While greener technologies are welcomed by underwriters as a means of diversifying underwriting portfolios, evolving technologies carry inherent risks which create additional layers of complexity – and on occasion, cost – to placements.
Increased prevalence of wildfire and flooding are keeping climate change a focus for underwriters. Power companies need to look intrinsically at the impact of their operations and externally at their exposure to climate-related risks.
The market position on coal is not black and white and power companies still need to demonstrate a compelling energy transition plan to secure capacity.
The incorporation of per- and polyfluoroalkyl substances (PFAS) exclusions into reinsurance treaties, and subsequently some market standard wordings, has led to a more widespread and consistent application of PFAS exclusions within policy wordings.
Placements containing coal and/or wildfire exposure continue to face greater scrutiny, as do those with significant United States (U.S.) exposure.
The balance is shifting in buyers’ favor
After a sustained period of unprofitability for casualty as a class of business, in 2023, Lloyd’s of London announced a second consecutive year of underwriting profit. A more buoyant underwriting environment, combined with limited loss activity and pressure to achieve topline growth targets, is driving the softening of the international liability market. The emergence of some new capacity, coupled with a greater willingness from existing insurers to deploy their full-line size, has driven competition and enabled buyers to better optimize their program structures and terms.
Generally, underwriters are increasingly willing to challenge technical pricing and take a longer-term view on programs that they are keen to retain. This is borne out of a growing recognition that it may be more challenging to regain positions on sought-after programs in a softer market.
Forward-thinking liability buyers are mobilizing to capitalize on increased market stability and softening conditions.
Download the full article to find out how to navigate key trends in the year ahead.
Disclaimer
WTW offers insurance-related services through its appropriately licensed and authorised companies in each country in which WTW operates. For further authorisation and regulatory details about our WTW legal entities, operating in your country, please refer to our WTW website. It is a regulatory requirement for us to consider our local licensing requirements.
