According to reinsurance broker Marsh JLT Specialty’s fourth Energy Insurance Quarterly Newsletter of 2020, the various component parts of the energy and power insurance market have all continued to harden throughout this year.
Even where the loss environment has improved, such as downstream or upstream, there is still momentum from insurers to pursue premium rises in some cases on top of rises over the past two years.
This is driven by wider issues affecting the insurers including COVID-19, natural catastrophe losses from hurricanes, derechos and wildfires, and for some syndicates intervention from Lloyd’s.
Several years ago, in response to unprofitable results in particular classes at some syndicates, Lloyd’s implemented a plan to remediate underwriting in certain businesses introducing stricter guidelines on the business plan approval process of syndicates.
Those various reviews have resulted in withdrawals from certain classes, reduction of capacity in various lines, and the closure of some syndicates entirely.
Some syndicates’ results mean that they now enjoy ‘light touch’ status where by their business plans are approved automatically, while Lloyd’s remain more closely involved in the approval of others.
Coverage restrictions, including exclusions related to COVID-19 or communicable disease and differing approaches across insurers in relation to cyber write backs – resultant damage and/or deliberate acts – present a further challenge for clients.
That said, the energy and power insurance markets have coped well with the logistical challenges of trading in a locked down marketplace, though response times are often slower.
Both insurers and brokers have adapted to this new trading environment, accelerating the transition to universal adoption of digital trading platforms by several years.
