Energy market conditions creating “story of two halves” with widening desirability gulf, according to latest WTW Energy Market Review
16 April 2024 - 7:45PM
The energy insurance market has provided some much-needed stability
amidst a period of turbulent geopolitics and economic instability.
While power dynamics sway decisively in favour of buyers, a deeper
examination reveals a stark divide with the emergence of a widening
desirability gulf, according to the Energy Market Review published
today by WTW (NASDAQ: WTW), a leading global advisory, broking and
solutions company.
Deeper insight into risk and performance data saw a
homogenisation of risk appetite among carriers, with a strong drive
from most markets to grow on the same, highly desirable upper tier
business. This competitive pressure has the potential to impact
less desirable placements, which suggests some clients will need to
work with their specialist broker to continue to attract strong
market support and optimum terms.
Relatively benign loss activity across all the energy sectors in
2023 saw markets return to profitability once again, with no signs
of any insurers looking to withdraw from the sector. Capacity
across all the energy occupancies remains abundant, albeit
stabilising in most sub-sectors.
Graham Knight, global head of natural resources at WTW, said:
“This widening desirability gulf between the best and the rest is
great news for those clients considered upper tier as competitive
pressures for this business will most likely drive softening rate
trajectories throughout 2024. Conversely this is less good news for
the smaller, less desirable placements which could face more of a
challenge for optimum capacity.
Key findings include:
- Environmental, Social and Governance: ESG
considerations are now well understood among insurers, and most
carriers have adopted a partnership approach of supporting their
clients through the transition in favour of applying exclusion
policies.
- Energy Transition: insurers are keen to
support clients with their emerging exposures generated by the
adoption of transition technologies, such as carbon capture and
storage, and hydrogen, and are viewing these new technologies,
alongside renewables, as a key component of their future portfolio
mix.
Knight added: “In 2024, risk leaders will need to consider the
longer-term emerging risks on the horizon. The energy transition,
geopolitical developments and the changing macro-economic
environment are converging to create new risk considerations that
could have a more severe impact on businesses than was previously
anticipated. As the whole energy system undergoes transformation,
adaptation and strategic decision making will be crucial.”
The complete report can be downloaded here.
About WTW
At WTW (NASDAQ: WTW), we provide data-driven, insight-led
solutions in the areas of people, risk and capital. Leveraging the
global view and local expertise of our colleagues serving 140
countries and markets, we help organizations sharpen their
strategy, enhance organizational resilience, motivate their
workforce and maximize performance.
Working shoulder to shoulder with our clients, we uncover
opportunities for sustainable success—and provide perspective that
moves you. Learn more at wtwco.com.
Media Contacts
Sarah BookerSarah.booker@wtwco.com / +44 (0)7917 722040
Willis Towers Watson Pub... (NASDAQ:WTW)
Historical Stock Chart
From May 2024 to Jun 2024
Willis Towers Watson Pub... (NASDAQ:WTW)
Historical Stock Chart
From Jun 2023 to Jun 2024