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.
Get ahead of the curve: early engagement with your broker remains key, as allowing sufficient time to engage with underwriters is critical to unlocking optimal capacity. This could be through roadshows facilitated by your broker to support the development of key strategic relationships and promote effective engagement with the market.
Provide a robust and data-led underwriting submission to help markets understand your risks. Gathering data, partnering with experts and engineers to answer any technical questions, and aligning the narrative with brokers will put buyers in a stronger position when negotiating with insurers.
Consider reassessing program structures to capitalize on evolving market conditions. In a softer market, some carriers may be willing to challenge their technical rates to win and/or retain business, however, relationships with longstanding incumbents should be carefully considered. While new capacity might be cheaper in the short term, taking a strategic view of risk and aligning with long-term insurer partners is key to optimizing insurance programme terms and conditions, and ultimately building resilience within your business.
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.
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| Title | File Type | File Size |
|---|---|---|
| Power ahead: an opportunity for liability buyers to capitalize on stability and softening conditionsPDF | .7MB |
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