Posted in News on 24 Mar 2022
Despite significant cumulative loss activity in the power sector in 2021, rates have only risen modestly. Factors which have contributed to this are a significant slowing of rate increases by underwriters in the property market, some of whom also write power.
There have been new pockets of capacity emerge which have had the inevitable effect of creating an increase in competitive tension. Q4 also saw two large US accounts leave the conventional market in favour of OIL; this saw a substantial loss of premium to certain markets and a need to write more income.
Clients with substantial Nat Cat exposure have also seen a similar situation. Whilst there is still clearly a hesitancy and rigid control regarding deployment of capacity, Q4 wind exposed renewals in particular also saw lower rate increases than in previous years.
Markets still continue to remain disciplined in their underwriting. Provision of recent/high quality information is still a major determining factor in a successful placement outcome. The Omicron variant of COVID-19 dictated that desk top engineering reviews still prevailed in Q4 but as this shows signs of slowing significantly, we are now seeing plans for physical inspections being put in place. We are now working with our clients to get back to this position as it is most beneficial to them.
1 January 2022 saw the introduction of the new Lloyd’s directive as regards to coal; with the initially proposed stance being that no new coal business was to be underwritten from that date. However, in light of subsequent discussions between various parties, there has been a subtle change of emphasis with each syndicate now having a more individual responsibility towards their attitude to new coal business. Many have chosen to remain with the existing policy of not putting any new coal accounts onto their books; but others have adopted a policy of accepting new business where the client can demonstrate a clear approach to working towards an orderly transition to renewable energy.
This change in strategy is something which we are monitoring very carefully with a view to supporting clients in “Future Proofing” their business.
Head of Power, Energy
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