Global Insurance Marketplace Insights Q3 2026 – Natural Resources

ROB HALE: Hello, everyone, welcome back to the Marketplace Insights podcast series. We're discussing the power and utilities market current position. I'm Rob Hale, global head of power and renewables. And I'm delighted today to be joined by Russell Ashe, UK placement leader at Willis, and Simran Minhas, one of our senior brokers, who's been working stateside over the last six months on her way back to the UK, so able to give us the benefit of both sides of the pond on the market position. This podcast follows the launch of our recent parent market review, where we explore the current state of the market and the factors, which have influenced it this year. If you'd like to read the full review, please search for power market review on our website, www.wtwco.co.

So guys, we've seen the power insurance market conditions remaining highly competitive. There's abundant capacity in the market, rates have been falling, and there's more insurer appetite for growth. For listeners who may not be close to the day-to-day market dynamics, how would each of you describe the current state of the power insurance market in your region? And what are you seeing that stands out most in 2026? I'll start with Russell.

RUSSELL ASHE: Thanks, Rob, delighted to be here. I suppose I'm going to start with the first part, which is that what stands out most in 2026, which is purely really the actual rate of decline. We've seen markets in the power and renewables space, which have flipped from rate hardening and softening previously but in much more measured way. So it's really the rate of decline in terms of the softening market that we've seen, which has probably been most surprising and I think certainly probably been most surprising for clients and insurers alike.

So as I said, it's very much a softening market that we're seeing. It's a well-capitalized market. As you said, we've seen new entrants and abundant capacity. What's really been surprising as well is the actual markets prepared to quote and offer lead terms. Historically, it's been a sector, where there have been very, very few leads, very few markets prepared to actually quote competitive terms and certainly not prepared to vote against incumbent lead markets.

All of that has changed quite rapidly. We've now started to see markets much more prepared to defend their position. So on the flip side, we've seen terms and conditions really remain robust. We haven't seen a deterioration of deductibles or significantly increased limits. So it's really a market that's very much focused on rate.

ROB HALE: Thanks, Russ. And Simran, how are you seeing things over in the US and now obviously with half an eye on London as well?

SIMRAN MINHAS: Yeah, thanks, Rob and thanks, Russ, and happy to be on the podcast, so thanks for having me. I'd say for the US side of things, it's very similar story to what Russ just said. I think it's very much still a buyer's market. And it continues to be very attractive place for clients at the moment. What I'd say is similar story to London is that the competition amongst US insurers remains to be strong with an abundance of available capacity.

Albeit what I would say is it's probably not to the same extent, as you guys are seeing in London. I think just given comparatively, there's a smaller number of market participants in the US, with the key differentiator being that there's the presence of several large domestic corporate insurers, which remain under pressure to grow, whilst the London continued participation on those larger and more complex risks helps to sustain that competitiveness in the US as well. I think as a result, the rate reductions across much of the sector are continuing because of that and particularly for well-performing accounts.

I would say that specifically for those large portfolio operators with more of a diversified generating fleet and strong engineering standards, mature risk management and strong financial backings, that those accounts are seeing particularly positive outcomes. And I guess that generally comes down to the scale of those accounts and the diversification factor of those risks. And those clients are seeing meaningful premium reductions.

The other thing I would mention as well and more importantly as well, I guess, is that the same can be said of those large utilities and IPPs, where those clean, standalone risks with good loss histories and strong maintenance practices are also securing strong rate reductions, which we've continually been seeing in the past 12 months. I'd even as far as go to say that those clients that have experienced losses, the market, whilst it remains to still be constructive, underwriters are taking a little bit more of a softer approach and generally more focused on understanding what was learned and what improvements have been made since those losses, rather than taking more of a restrictive outlook that we maybe did in the hard market.

So I'd say there's still a willingness amongst the insurers to build long-term relationships, really. But overall, I guess I'd say it's still positive. I think the one area for the US specifically and I guess globally also is the specific attention to NatCat exposures. Obviously, wildfire, hurricane, flood, SES are a constant across a lot of the US regions.

So I'd say weather's always been a driver of the kind of insurance results and what markets are doing. And I suppose if we look at the last 18 months alone in the US, we've seen a lot of significant losses from the LA wildfires, which have been one of the more costly wildfire events, along with the continued run of SES events across Texas, the Midwest, and Southeast in the first quarter of the year.

So I guess whilst the first half of 2026 has been somewhat less active than in 2023 and 2025, the kind of severe weather still remains as one of the largest drivers that people be watching out for. What I will say to those events, though, is, obviously, these events cause reinsurers to keep an eye out for natural catastrophe events and to rebalance. I would say, that knowing those events really had an impact on ratings following which and have made no difference to the kind of decline in rating over the last eight or so months.

ROB HALE: OK, guys, thanks for your views on the market. Switching it up a bit, I guess looking at technology, the power sector is seeing increased investment into new technologies, particularly new turbine technologies, driving higher efficiency, also storage solutions, hybrid assets, and just wider electrification initiatives across the piece, so creating opportunities and also challenges for the insurers as well. How do you guys think the underwriters are thinking about emerging technologies today? And how can organizations demonstrate that the risks are being effectively managed. Simran's, starting with you, question to you, please.

SIMRAN MINHAS: Yeah, thanks, Rob. I think that's a really interesting question. Obviously, we're seeing a lot turning up in way of emerging technology. I think I'm actually going to take this in a slightly different way and take the question in two parts also and talk about emerging technology and how that doesn't necessarily always mean, I guess, brand new technology, but perhaps new application. And I think this is particularly relevant for the US as well.

So my example of this is talking about gas reciprocating engines. We all these engines have been around for decades and have been used in peaking plants, industrial facilities, and co-generation plants. But what we're now seeing, particularly in the US and globally too is these engines being used at utility scales for primary power sources for AI and hyperscale data centers.

Now, we all know that's the buzzwords these days and for good reason, obviously. But these engines where they used to essentially act as peaking power, they're now essentially being used as bridging power between temporary power and permanent power infrastructure, helping those data center and AI developers get online years before the grid can even catch up. I think when you're looking at regions in the US in particular, this is particularly evident across ERCOT PJM regions, for example, Virginia, Ohio, where parts of the Southeast Virginia, Ohio, where data center demand is growing much faster than transmission and utility infrastructures as well.

I think when I was looking at this previously in Texas and Ohio alone, there's already around 4.6 gigawatts of announced or developing gas reciprocating engine projects. And so that just goes to show how there is really a shift in the way that those are being utilized. And I think what's the most interesting part is that this technology is already mature.

So I think the market's view on these kind of projects can be a mixture of enthusiasm and also caution as well. So I think from an underwriter's perspective, they're attractive because they're engines that are proven, flexible, and are very modular. And a data center doesn't necessarily need all of its power all on day one. So the capacity can be built in phases.

And they also have excellent redundancy. So if one engine trips, you lose a small amount of capacity rather than an entire power block, as you might do with a traditional CCGT plant. But I think the flip side of that and putting my underwriter hat on, I think concerns with this could also be that instead of losing one large turbine, you now have dozens of different engines and more moving parts, more generators, more turbochargers.

So what that can lead to is a higher frequency of maintenance that's required and also engine failures at a higher frequency and a lot more numbers as well. So there's that to take into consideration. I think there's also probably questions about the continuous 24/7 operations that data centers need, as well as fuel supply resilience, which, particularly with ERCOT, is already becoming a little bit of an issue.

So I think where the historical data doesn't fully reflect these new operating models, I think that's where underwriters are going to want to know a bit more, as well as what their associated, perhaps, CBI implications are as well. So to speak to the second part of that question is, how organizations give underwriters confidence, I think, ultimately, it comes down to demonstrating strong risk management. Just the best performing fleets aren't necessarily the newest ones, as we're seeing with these reciprocating engines.

They're the ones that are going to have the most disciplined maintenance programs, some kind of real-time condition monitoring, strong OEM supports, spare parts, strategies, and resilient fuel supply arrangements. So ultimately, I think underwriters are going to look at these projects and these types of projects and similarly to fuel cell SMRs and all the other hybrid projects that are coming online, that's traditional power plant, more to the view that they're mission critical infrastructure. So I think the key is not only showing that the technology works, but that the operational risks are understood as well. I don't know. What are your takes on this, Russ?

RUSSELL ASHE: Thanks, Simran. So Rob, you asked about what underwriters are thinking about emerging technology. It's an interesting dynamic at the moment, particularly in the conventional market, that it's not something that, perhaps, insurers have had to consider too much, perhaps other than when it comes to latest [INAUDIBLE] technology, or whether it's about units two shifting, or whatever it might be, much less so, perhaps, than the renewable energy market, where we've seen real exponential change in turbine size when it comes to wind turbines and the size and locations of solar projects.

I think, potentially, because it's a conventional insurance, from an underwriting perspective, hasn't had the same kind of levels of investment and perhaps not the same, certainly, maybe from an engineering perspective. It's challenging. Underwriters, as we know, will naturally be cautious when it comes to things that they don't fully understand. So it's difficult for them looking both at new technology, as well as how these units are operating.

And if you bring into that, things like data centers and how that's going to impact on run rates on technology, things like hydrogen, if that starts to continue to get mixed into the fuel, and how they're going to manage all of these things. So whilst I think underwriters are thinking about it, it's challenging for them. So from a client perspective, I think the organizations that are going to thrive are, as someone was just saying, the ones that can actually really present their risk credibly to insurers, a good engineering story, strong warranties that go beyond just covering damage and ensure that they look at downstream damage as well.

Relationships with OEMs, whether it comes to LTSAs or making sure that being active part of user groups, being able to demonstrate those things are going to be really going to be really critical, we touch on it in the report itself. But how insurers managing contingency and supply chains, it's not enough now to just state what spares you've got. But you need to be able to demonstrate that you've got plans on top of your existing plans as well and what that might look like if you're having to look beyond your tier one suppliers.

So there's a lot for everybody to consider. And some of it's going to come down to scale because certain companies are going to have more buying power than others. But it's all about the story that we can present to insurers that's going to allow them to offer the best solutions to clients.

SIMRAN MINHAS: Yeah. And I think the interesting thing that you just said there, Russ, as well, is the scale piece and the speed at which it's happening. Because I think the skilled workforce has always been an issue. But particularly where there's a lot of data centers and a lot more demand for power, how is that relating to the skilled workforce and being able to match the speed at which people are qualifying and have the same level of experience that they once did in a relatively slow moving power market? So is the skilled labor force also keeping up with the demand levels? I would probably say not.

RUSSELL ASHE: Yeah, exactly. And we've seen over the last few years, OEMs go from struggling to actually have an order book in our position, where we've got OEMs that have got order books stretching back into five years. So inevitably, there's going to be some strains or strains along the way.

ROB HALE: It's going to be interesting to see how the market is affected when you've got a lot of the technology that's coming in, sits within the data center world. And a lot of the data center world is actually attached to the commercial market, property market, insurance space, as opposed to the energy and power space. And those losses are going to sit, not only in the energy and power space, but in the general market space. So it'd be interesting to see how that impacts.

OK, guys, let's shift back on to the market and talk again about the current market position. But more importantly, looking ahead, what do you guys think the outlook in the insurance market is over the next 12 months? We talked earlier about the rate reductions, the amount of capacity that there is in this space. It doesn't seem to be slowing down on either side.

And yet, we are hearing messages from some of the major carriers in particular recently with Eric Anderson making statements about AIG not chasing the market down in certain segments. Do you see any floor to the current market position? What do you think the outlook is at in the power market over the next 12, 24 months? Start with Simran, shall we, on that one?

SIMRAN MINHAS: Yeah, thanks, Rob. I think over the course of the next 12 months, the market's probably going to remain favorable. I think, particularly when we're looking at the kind of abundance of energy demand, particularly in the US as well, I think the capacity remains the same in terms of there's a lot of insurers keen to get into the space, as you said. But there's obviously going to be downfalls to that as well.

I think, obviously, clients will benefit from the reduced rates and stable capacity that's coming into the market. But I think on the flip side, is that also going to continue encouraging poor practices within the industry as well. I think there's a slight chance of that. Particularly when you look at how many new developers are coming into the market and the speed at which they need things, is that going to result in cutting corners?

And if clients and developers et cetera are reaping rewards nonetheless, then that may lead to bad practices, as I've just mentioned. I think the biggest threat, as I mentioned earlier as well, is probably going to be the element of things. I think if the industry suffers two or three major NatCat events, particularly in a combination of those as well, I think capital is going to tighten and sentiment could shift quite quickly as well.

So it's managing all of those different elements. You can't exactly predict NatCat. And we all know it's getting more severe and more frequent as well, not only in the US, but globally, too. I know we're supposed to be expecting to enter super El Niño phase next year as well. So the NatCat landscape could change quite drastically relatively quickly, too. And as I mentioned, that's quite hard to predict.

So there's definitely precautions that need to be made, I suppose. I think the other element of this and something that I would be particularly interested in terms of keeping an eye on is the transmission and how that expands and what investment's made on that side of things. I think we know PJM, ERCOT, and other RTOs are under a lot of pressure at the moment to make sure that there's balanced reliability with the huge volume of generation and large loads that are seeking the grid access as well.

So I think when we're looking at transmission networks, they aren't being expanded quickly enough to keep up with the pace of that demand. So I think if that challenge persists over time, underwriters are going to eventually start to evolve how they're looking at the risks, too. I think, historically, underwriters have been looking heavily on the asset itself.

But going forwards, I think they'll be spending more time on looking at whether a project can actually connect to the grid, export its power, and achieve revenue assumptions that might be way out of kilter to what they were initially thinking. So I think all of these comes with extra attention that's needed a little bit more precaution and longer term thinking than the next 12 months and what the insurance market is doing necessarily right now because that can change in a snap really.

ROB HALE: OK, thanks. And Russ, how are you seeing it?

RUSSELL ASHE: It's difficult to see right now because I think our expectations, certainly for the next 12 months, is there's no reason to not anticipate more of the same. From what we understand, the profitability in the sector remains high. Investment returns are not necessarily masking underwriting results and underwriting income.

We've seen certainly this year in the last four years, some geopolitics really start to impact on the wider sector, whether it be impact on supply chains and gas prices from the Ukraine conflict or this year in what's happening in the Strait of Hormuz. And the wider market has been really robust. It doesn't seem to have slowed down. Apart from in certain sectors, it doesn't seem to have slowed down appetite for underwriters taking on risk

So whilst that profitability remains and underwriters are getting those returns, it's very difficult to see that we're not going to see more of the same. The treaty market remains robust. And we know that this year, if you're a buyer of treaty reinsurance, you've been seeing good outcomes, again, if all of that should continue to feed into results on the direct side.

I think in terms of there's actually being a floor on pricing, it's probably going to take a number of things. I think, historically, we've always viewed a natural catastrophe events as being the driver. But again, the market has shown in the last 10 years that it's able to absorb significant amounts of natural catastrophe losses.

So at the moment, like I said, we've got some of these geopolitical events that are impacting the wider market. Probably, the one thing that hasn't really been discussed much over the last few years, whilst rates have been increasing its technical rate. And we haven't heard too much about that from the insurance side.

I think if we start to see a real erosion of technical rate and underwriters finding it a real challenge to meet their internal governance and compliance requirements, it will be interesting to see what impact that has. Some of this new capacity, it's entered the market seemingly very quickly. Is there a risk that it might leave the market just as quickly?

And in these previous years, we've seen some major insurers, perhaps, take very public stances on their portfolio. Could that really start to change if that happens again? I think it seems that it's going to take a number of those things to happen and continue to happen for us to see any brakes being put on the market. But it does show that, perhaps, that power is in that volatile space, that, perhaps, the broader property and energy market could be. And that we could, just as quickly, as we've seen rates reduce, we could quickly see them rebound.

ROB HALE: Interesting to see if only we had a crystal ball, I guess. But I think the general feeling is, and hearing from both of you, is that current conditions are here to stay. The general rating environment versus losses seems to be positive for underwriters. And so why would it change? OK, guys, that's time, I think. So thank you both for your views, really insightful, really interesting.

RUSSELL ASHE: Thank you, Rob.

SIMRAN MINHAS: Thank you.

ROB HALE: I think that is the end of our pod.

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