Power & Renewables
Plenty of capacity available
The Power and Renewables market is going strong with plenty of capacity available for insurance buyers. New entrants are competing for business while incumbents are eager to increase their market share. Several markets are now establishing themselves as additional lead options in the Renewables market.
Changes in policy terms and conditions
Underwriters are requiring updated assets valuations before calculating premium, including monthly revenue figures. In addition, they are requesting monthly reports on business interruption incidents as this is currently an area of concern for insurers.
Underwriting changes
- Tokio Marine HCC-owned GCube has started writing conventional Power through a spin-off.
- Managing general agent (MGA) White Cap PVI Security
- MGA Blue Mountain Underwriting PVI Security
- MGA Specialty Underwriting PVI security
- Sukoon’s Lloyd's syndicate has started underwriting Power and Renewables
- MGA Artex Risk Solutions
- Skala (MGA) security being AM First
- InsureX also offering Power capacity behind their selected lead carriers
- Novagen Specialty Underwriting Fidelis Security for renewables
All senior underwriters for Power and Renewables have left Liberty Specialty Markets. While Liberty was once an important lead market, it is no longer regarded as a lead market. The entire senior management and key underwriting staff from Travelers, the lead market for North American business, have left the insurer to set up a new MGA called Volt which is currently building capacity with expectation to start trading late 2024. Senior leadership has also resigned from RSA, a key Power & Renewables insurer, with one confirmed (Jon Drabble) to be joining Travelers.
Geographic/sector differences
The markets in Middle East and Europe remain very competitive. Insurers operating in Latin America are actively competing with the London Market for market share. In the US, insurers are also becoming more aggressive as they try to increase their market share in this segment. Australian insurers remain strong and are increasing their market capacity locally with new hires at AIG & Everest, increasing competition for Australian Renewables. Natural catastrophe prices for Power and Renewables are generally falling worldwide.
New solutions
We are expecting to see more activity around new products and solutions as the overall market is softening and underwriters seek to grow their portfolios.
Outlook
Expected range in rate changes for the next 6 months for claims-free portfolios
Rates are being driven down by a combination of increased capacity, benign loss activity, and an absence of natural catastrophe (Nat Cat) events impacting the industry. The trend is also reversing a recent tightening of terms and conditions whilst investments continue to boost the Power sector worldwide.
Expected capacity change in the next 6 months for claims-free portfolios
With the new capacity coming into the market coupled with pressure on existing markets to benefit from current rates, the overall capacity is expected to increase considerably. Placements are oversubscribed by 120% across all geographies and we don’t expect this to change in the absence of large losses.
Expected coverage change in the next 6 months for claims-free portfolios
Coverage changes are likely to favour clients, opening opportunities to increase Cat limits and negotiate lower rates. Deductibles, however, are likely to remain in place at similar levels.
New entrants are competing for business while incumbents are eager to increase their market share.
Emerging risks
Carbon Capture is a growing market segment and both developers/investors and insurers have yet to fully understand potential risks involved in such projects. As more data on Carbon Capture projects becomes available, we expect the development of market standards to enable a more streamlined approach to underwriting.
Renewal recommendations
Starting renewal preparations early will allow insurance buyers to take advantage of opportunities to reduce cost and increase coverage. More granular information allows brokers to differentiate your risks and further improve deal conditions. Be prepared to consider new leaders to help create competition and invest time in market roadshows.
For further information, please visit the Lockton Specialty page, or contact:
Kevin Ferguson
Senior Vice President
E: kevin.ferguson@lockton.com