Powering Ahead of the Evolving Risk Landscape
The power industry risk landscape is constantly evolving and today’s insurance and risk managers must remain vigilant of the trends and issues impacting their business.
Power companies face new challenges in the form of climate change through the rising frequency and severity of natural catastrophe losses, and also the consequences of decisions made by the world’s largest insurance companies to reduce their carbon footprint and stop investing in or insuring coal assets. Recent dam collapses in Laos and Columbia have also raised questions around the integrity of the design standards of such assets in emerging markets. Technological advancements in the form of advanced gas turbines, digitalization, blockchain, data and analytics, and the always topical issue of cyber resilience are all ever increasing risks that power companies need to contend with.
The 2018 Marsh Power Insurance and Risk Management event held over two days in Bangkok recently brought together some of Asia’s top risk and insurance managers in the power industry to hear more about these and many other risk issues. Presentations were provided by experts in the fields of cyber resilience, contract law, offshore wind, risk engineering, data and analytics, and of course specialist power insurance industry professionals.
We made a deep dive into various topics including:
- The impact of the insurance market’s attitude towards coal fired generation assets and the need for clients to prepare today for this potential market changing position.
- The factors that contribute to making an Engineering, Procurement and Construction Contract bankable and how clients should best position themselves to ensure that this occurs.
- The approach taken by power risk engineers to identify and evaluate risk, and how using engineering benchmark data can help clients assess where they sit in relation to other similar assets, improving their own risk quality.
- Using data and analytics to help optimize program design and structure insurance programs that suit their own ability to tolerate and transfer risk.The technical factors that influence how insurers underwrite power generation risks and what power clients can do to improve their own appeal in the insurance market.
- Strategies and claims case studies showing how to mitigate power claims costs, and improve timeliness around settlement.
- The various challenges that offshore wind projects have in trying to import this new and exciting technology into Asia.
- The importance of appropriate contractual risk allocation and how manufacturers’ warranties impact the insurability of new advanced gas turbine technology.
- The ever increasing number of cyber security threats facing power clients, where and who these are coming from, as well as some of the strategies and solutions that are available to overcome these threats.
- The dark art of ensuring that business interruption insurance is appropriately understood, and structured to ensure that clients receive what they expect in the event of a claim.
During the event, live polls were conducted with attendees to gauge their views of the topics being presented. The feedback was insightful and showed some clear trends such as:
- Close to 60% of respondents believe that the changing attitude of insurers towards coal could result in an inability to procure insurance, increased insurance costs, changed policy terms and conditions, and/or an inability to comply with contractual requirements.
- Over 40% of respondents agree that understanding the claims process and information requirements is important to settling claims quickly. Interestingly, a similar number believe that good open communication between all parties is the key driver for expedient claims.
- 63% of respondents believe that it is likely their companies’ Operations Technology has direct network connections to IT/the Internet/vendors that may be undocumented or unknown.
- 51% of respondents believe that a lack of appropriate regulation and local government support could slow down the development of offshore wind in Asia.
- 59% of respondents see that the major benefit of undertaking a risk engineering report is that it will provide recommendations to help improve their overall risk quality and management.
Power risks are continuing to evolve and those businesses that stay aware and develop strategies to meet these challenges head-on are best placed to survive and thrive. The attendance by so many risk and insurance managers from across the region illustrates this sector’s commitment and desire to stay on top of the risk and insurance issues impacting their business.
We would like to thank everyone who participated in the 2018 Marsh Power Insurance and Risk Management event, including the attendees, sponsors, and speakers, and look forward to your attendance at future events.
If you were unable to join us at this event, please feel free to request for materials through your local Marsh representative.