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A senior figure in the insurance space has urged the industry to embrace new risks facing the energy sector, saying changes are likely to bring both opportunities and challenges.
“The risks facing the power and renewables sector are wide-ranging and ever-changing,” says Trent Williams, head of broking for Willis Towers Watson’s Australasian operations.
“As the effects of climate change and geopolitical risk continue to create uncertainty and remain at the top of boardroom agendas, the rapid innovations in technology present both threats and opportunities,” he continued.
Williams’ comments come after the firm released its latest Power and Renewable Energy Market Review, which warns that companies in the conventional power and renewable energy sectors should prepare for disruption from a range of sources.
Independent and smaller coal operators which lack a diversified portfolio are particularly exposed, Williams warned, as major European providers increasingly pull back from the coal-fired generation sector for environmental reasons.
Other key risk areas identified in the review include the Lloyd’s ‘Decile 10’ initiative, which is setting the tone for a more rigorous global insurance market environment in 2019.
The report also warned that the development of innovations in power generation, such as larger wind turbines with increased output, could be hindered by insurers’ unwillingness to embrace the risks associated with unproven generation technologies.
“It is incumbent on the insurance industry to embrace the risks presented by these new developments and provide the appropriate risk advisory and risk transfer/retention solution,” said Williams.
“It is essential that today’s power and renewable organisations prepare themselves for the turbulence that disruptive change inevitably brings,” he added.
