In addition to interest rate hikes, energy insurance buyers are seeing a growing scrutiny of their environmental, social and governance practices, Willis Towers' Watson PLC said in a report on Friday. especially when reviewing oil and gas programs, Willis said.
An insurer's withdrawal from writing carbon and oil risks has had a profound effect on capacity in the international liability market, Willis said in his 2021 Energy Market Review.
As a result, fossil fuel companies are seeing more significant rate hikes, according to the report.
Viable capacity for buyers whose focus is oil sands has more than halved to about $ 200 million in London, compared to nearly $ 500 million 1
"A number of insurance companies in Bermuda can help reach the limits set by required, but at higher premiums and more restrictive terms, "Willis said.
Conditions in virtually all energy insurance markets continue to harden, although some mitigation for some risks is expected, according to the report.
Average premium increases were 25% to 40% in Willis' international debt portfolio between October 2020 and February 2021, depending on individual risk
"We have seen well over 50% for some programs that have not achieved this adequacy," Willis said. .
Increases in responsibility continue to depend heavily on the amount of program limit required, Willis said in a statement.
For real estate operations, a two-part market has been developed with businesses with a good spread of risk and premium income that attracts more moderate interest rate increases than the rest of the portfolio. In general, all markets review coverage terms and try to limit unusual or peripheral coverage such as cyber, charter liability, pandemic and sheer financial loss.
As a result of price and capacity constraints, several large energy buyers have chosen to self-secure part of their program or to reduce the total program limits rather than being held hostage to "wealth," Willis said.
Realistic accountability is estimated at $ 1 billion for most energy companies, depending on region and risk profile, according to the report.