LONDON, October 8, 2024 — After enduring years of hard-market conditions, the (re)insurance property and business interruption market cycles are starting to turn according to the Power Market Review published today by WTW (NASDAQ: WTW), a leading global advisory, broking, and solutions company.
While lower-level attritional losses remain a constant in the power sector, the absence of larger losses in 2023 and 2024 is expected to lead to more competitive pricing in property and business interruption. The international liability market has also stabilised with a small uptick in capacity and softer market conditions, leading to greater competition and downward pressure on rates.
Key takeaways from the review include:
- Demands on the power sector are gathering momentum as global electrification grows exponentially. To keep up, the lifespans of power assets are being extended. Companies will need to provide (re)insurers with a maintenance strategy that includes clear modifications to accommodate for ageing assets.
- There is a growing appetite for greener portfolios in liability, but evolving technologies carry inherent risks: the distinction between proven vs. unproven technologies remains. An increasing reliance on intermittent, weather-dependent sources of power is demanding more flexible grids and optimisation of operating systems.
- Transmission system operators (TSOs) are being challenged by transition as the existing centralised and large-scale power grid shifts to a solar, wind, and hydroelectric heavy power grid. The potential for transmission bottlenecks is growing, with generation assets now located further from load centres and in new regions with limited transmission infrastructure.
- Placements containing coal and/or wildfire exposure continue to face greater scrutiny, as do those with significant US exposure. Thermal will continue to be at the core of the base load supply strategy for most countries.
