LONDON, April 5, 2022 — The need to manage energy transition risk is being accelerated by the requirement to seek alternative sources of energy to oil and gas following events in eastern Europe, according to WTW (NASDAQ: WTW), a leading global advisory, broking, and solutions company, at the launch of its annual Energy Market Review.
The report also covers the volatility of the energy sector, with commodity prices surging to record levels arising from higher demand as economies emerged from the COVID-19 pandemic, as well as a concern around higher inflation rates. However, the report also highlights that, although hardening conditions in the Energy insurance markets are easing, energy companies will need better data, more convincing ESG strategies and careful monitoring of underwriting trends to manage any future market volatility.
The Report also outlines the following developments in the Energy insurance markets:
“How the markets react to premium income depletion as a result of sanctions and a short term increase in fossil fuel activity remains to be seen.”
Graham Knight | Head of Global Natural Resources, WTW
Graham Knight, Head of Global Natural Resources, WTW, said: “At the moment, the scales are finely balanced in all our markets; on the one hand most portfolios have returned to profitability, while on the other, the absence of any fresh underwriting leadership and a reluctance of insurers to “break ranks” is preventing brokers from forcing through any fundamental changes in market dynamics. How the markets react to premium income depletion as a result of sanctions and a short term increase in fossil fuel activity remains to be seen. In the meantime, the energy transition will wait for no one; every risk manager involved in the industry will need to address the uncertainties arising out of both the new geopolitical landscape and the mounting momentum towards achieving Net Zero emissions targets.”