Published on 16 December 2022
Share:
Energy Market Update: Downstream
Published on 16 December 2022
Now we have moved into Q4 of 2022, some of the reductions we were seeing in the 2nd and 3rd Quarters have started to tail off as the loss estimates from some of this year’s earlier incidents begin to become clearer space.
Capacity remains stable and we are not expecting this to be very different in 2023 with realistic working capacity available being in the region of USD4bn for international programmes and USD2.5bn for North American.
There continues to be an ever greater focus on Environmental, Social and Governance (ESG) issues across the globe and of course this will undoubtedly impact on almost all fossil fuel programmes sooner or later. Many insurers through corporate requirements are under great pressure to review their downstream portfolio with a particular emphasis on the ‘E’ of ESG. Whilst at this stage there is no market consensus on the issues we’re all facing with no-one in a position to predict how the downstream market will be impacted in the years to come. What we can say for certain is that we can expect insurers to require more focus on their clients ESG policies in order that they are able to demonstrate to their own managements and shareholders that they have taken this into account when determining the balance of their portfolio.
Valuations and in particular those for Business Interruption continue to be under the microscope owing to events globally, in particular as a result of the Russia/Ukraine conflict, leading to inflationary pressures across all types of assets and of course in particular on the value of hydrocarbons. Insurers are looking to Insureds to ensure that the values of all their assets are kept up to date.
In addition to the pricing conditions we have described above, there continues to be a push for tightening of terms and conditions where possible. We have seen this in three main areas being Testing and Commissioning with the push for the new LMA5197A Clause; the reversion to the Cyber Exclusion Clause NMA2916A over LMA5400; and finally in relation to Business Interruption values with the new LMA5515 Clause.
Whilst at the time of writing there are no specific sanctions on oil and gas emanating from Russia, there has been a push for policies to include an Excluded Territories Clause (Russia, Ukraine and Belarus) with main focus being to exclude CBI losses emanating from failure to supply crude or gas from one of the excluded territories.
Share:
Glyn Davies
Glyn began his career at Jardine Insurance Brokers International Limited in 1994 where he worked in the Energy Division and gained experience in all areas of the business from Broking and Account Management right through to Policy Wordings and Claims Settlement. In 1999, Glyn moved to the Energy Division of Aon Ltd where he worked as an Account Executive for various large North American and Latin American Clients. Glyn was promoted to the role of Director in 2008 of the then Aon Natural Resources and Construction Division. He joined Alesco Risk Management in August 2009.
Over the course of Glyn’s 28-year career, he has gained valuable experience in all areas of the business including, Onshore and Offshore Energy and Power risks (both Construction and Operational), Hull and Cargo, Marine Liability, Control of Well, Employers Liability and Business Interruption programmes. Glyn has experience in providing Technical skills for Energy and Power clients, including programme design and marketing strategies, and all aspects of day-to-day client servicing.
