Published on 03 August 2026

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Natural Resources Market Update H2 2026: Power

Published on 03 August 2026

The operational power market has continued to favour buyers throughout 2026, with conditions remaining soft despite an increasingly uncertain geopolitical and economic backdrop.

Strong insurer appetite, abundant capacity, and continued competition have enabled buyers to secure further rate reductions, enhanced policy coverage, and greater flexibility during renewal negotiations. For well-performing risks, the market remains one of the most competitive experienced in recent years. Pricing has continued to soften as insurers compete aggressively for business.

The past 12 months have seen further investment in underwriting talent, with Sam Bishop joining Chaucer, Steve Pearce moving to Everest, and Volt continuing to expand their capacity. These developments have increased competition, providing brokers with greater flexibility when constructing programmes and enabling clients to benefit from broader coverage and more favourable commercial terms. Established insurers have also responded by increasing their written shares, and demonstrating greater flexibility around deductibles, sub-limits, and policy enhancements.

Capacity remains plentiful across the sector, extending even to more challenging occupancies such as coal-fired generation. Whilst underwriting discipline remains appropriate, insurers continue to demonstrate an appetite for well-managed assets as they seek to diversify their portfolios and deploy available capacity.

Alongside these favourable market conditions, insurers are increasingly focused on several emerging risk trends. The rapid expansion of artificial intelligence has accelerated global investment in data centres, significantly increasing electricity demand and placing additional pressure on existing grid infrastructure. This has resulted in greater underwriting scrutiny of grid resilience, transmission capacity, and the growing reliance on captive power generation to support energy-intensive facilities. These developments present opportunities for the sector but also introduce new operational and resilience considerations that insurers are closely monitoring.

Supply chain resilience continues to be another key underwriting focus. Ongoing conflict in the Middle East has placed further strain on global supply chains, extending lead times for major plant equipment replacement components. As a result, insurers are placing renewed emphasis on clients' critical spare parts strategies, recognising that access to replacement equipment remains one of the most significant drivers of business interruption losses following a major incident. Clients that are able to demonstrate robust contingency planning and appropriate inventories of critical spares continue to differentiate themselves.

Geopolitical uncertainty is also contributing to continued volatility in energy markets. Sustained increases in gas prices have the potential to increase business interruption exposures and replacement costs across operational power assets, reinforcing the importance of ensuring declared asset values and business interruption sums insured remain accurate and reflect current replacement costs. Underinsurance remains a key concern for insurers, particularly where inflationary pressures and changing energy prices have materially altered asset values since previous valuations were undertaken.

Looking ahead, the market is expected to remain favourable for buyers, with strong competition and abundant capacity supporting continued softening over the coming year. However, underwriting attention is increasingly shifting towards operational resilience, supply chain management, valuation adequacy, and emerging infrastructure risks associated with growing electricity demand. Clients that continue to demonstrate effective risk management, maintain accurate exposure information and proactively address these evolving challenges should remain well positioned to achieve competitive renewal outcomes and secure comprehensive coverage.