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In its recent Asia Energy Conference in Shenzhen, China, Willis Towers Watson called for the transformation of the region’s energy insurance industries, amid geopolitical tensions and rising demand for clean energy.
The conference’s fourth edition brought together 170 participants including corporate risk managers, adjusters and insurers from leading oil refining and chemical companies, engineering companies, banks, domestic and international insurance companies across Asia.
With the theme ‘Riding the winds of change’, the conference provided a platform for energy industry players to discuss and debate market issues in Asia including upstream and downstream risks and solutions, geopolitical risks, oil geopolitics, and its challenges to Chinese companies. It also tackled employee risks faced by energy companies and insurance companies. Participants exchanged views on interdisciplinary topics such as the outlook of the energy insurance market, accident claims, cyber risks, and how new technologies and innovation will impact the energy sector.
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One of the main topics in the conference was the demand for clean energy such as liquefied natural gas (LNG) and its growth in China, with the government’s encouragement. This has resulted in the growth of the energy sector and more emerging energy companies in China.
In 2018, China imported 43 million tons of LNG, or 40% higher than the previous year, making it the second-largest importer following Japan, and possibly the largest beginning 2019. According to Willis Towers Watson, strong demand for natural gas will have a major impact on China’s energy industry landscape. As such, it is important for Chinese companies to be able to identify the risks, from project feasibility to operation, and the corresponding risk transfer solutions.
Furthermore, international endeavours such as the Belt and Road Initiative (BRI) bring both overseas investment opportunities and risks for Chinese companies, as demonstrated by recent geopolitical tensions between China and the US.
“The international energy insurance markets remain volatile with continuous firming taking place,” said George Nassaouati, head of natural resources, Asia at Willis Towers Watson. “This is affecting budgets of energy companies on premium spent and the level of protection they can get through risk transfer. This firming is definitely slower in China, where Chinese energy companies are still enjoying better insurance terms than their counterparts in the international market. With the BRI, energy companies can continue to take advantage of the China insurance market rates, terms and conditions.
“Furthermore, as part of the Chinese insurance market development, Chinese insurers should also look to attract international insurance buyers,” Nassaouati added. “The benefits go beyond better rates, terms and conditions as the buyers will enjoy good security, and, most importantly, stability in their buying pattern through a stable market which is less susceptible to volatility. We will continue to work with Chinese insurers to optimise service levels and drive efficiency in claims settlement.”
