Power production remains the foundation for all business since Michael Faraday first produced it in the 1830s. Neil Jurd and Jon Parker, two of Cooper Gay’s London based power experts assess the ever-changing market.
Power generation is a constantly evolving arena. Most people’s perception of a power station is one of a large chimney billowing out smoke but in the modern day, this could not be further from reality. In today’s climate, power is generated using conventional feedstocks such as coal, gas and steam, but a new very significant tranche of power providers has emerged and harnessed nature’s energy in the form of wave, wind and solar power.
With dwindling natural resources and legislative restrictions at an all-time high, the power market will continue to evolve and remains a very exciting place to trade.
Power Generation - types and techniques
There are many different types of power generation processes, all of which have their own individual stresses and challenges; both in terms of operation and also regarding the placement of insurance. These include the ever prevalent machinery breakdown risk associated with the differing types of power train technology and the availability of replacement equipment should the worst happen.
The power generation market has harnessed almost every available fuel source, from fossil fuels to hydrogen cell technology. Most readers will be familiar with the visible smoking chimneys, or the appearance of new wind turbines along the coastline, amongst other places. Similarly, energy companies are harnessing the power of the tides and currents as well as solar, many countries with the intent of moving away from the perceived riskier source of nuclear energy.
Risks
The risks associated with every type of power train technology are unique. Significant historical data has allowed the energy market to know as much as the manufacturers. In addition, reinsurers are increasingly working closer with manufacturers to understand the continuous development of turbine technology and the inherent risks involved. This allows reinsurers to provide appropriate bespoke coverage; tailored to the specific technology at risk.
In addition, Business Interruption coverage is to the forefront of reinsurers' minds as a failure to adequately understand this coverage can lead to significant loss exposure.
In addition, Business Interruption coverage is to the forefront of reinsurers' minds as a failure to adequately understand this coverage can lead to significant loss exposure.
Insuring Power Plants
Provision of the highest quality information is critical to a marketplace which has suffered significant loss activity over a sustained period. Whilst there have been no major withdrawals of capacity, there is an ever more cautious approach being taken to the underwriting of business and associated capital allocation.
This is not just applicable from a risk quality perspective but also the deployment of catastrophe capacity in certain geographical areas, as the power sector of the market has also suffered from the recent spate of natural disasters across the world.
This is not just applicable from a risk quality perspective but also the deployment of catastrophe capacity in certain geographical areas, as the power sector of the market has also suffered from the recent spate of natural disasters across the world.
"Reinsurers are increasingly working closer with manufacturers to understand the development of turbine technology and the inherent risks involved.”
There are specialist markets which focus purely on the technical underwriting of power insurance and reinsurance; the majority of whom are supported by ex-industry engineers, who are specifically employed to review the technical quality of all risks prior to referral to underwriters. This, along with an ever increasing reliance by underwriters on such modelling tools as the RMS system, has meant that brokers have to ensure early planning and involvement in presenting their client’s business to the market.
The Cooper Gay Team
Cooper Gay has a team of brokers all of whom have extensive experience in the understanding and placement of power business for a number of years.
With more than 25 years of experience within the sector, Cooper Gay Team has been exposed to all facets of power generation, therefore being able to help clients differentiate themselves from their competitors by advising on the content of information required in order to stay ahead of the curve regardless of market conditions, not just in terms of pricing but also coverage.
With more than 25 years of experience within the sector, Cooper Gay Team has been exposed to all facets of power generation, therefore being able to help clients differentiate themselves from their competitors by advising on the content of information required in order to stay ahead of the curve regardless of market conditions, not just in terms of pricing but also coverage.
Cooper Gay specialises in:
•Conventional power generation.
•Renewables Energy (both on and offshore).
•Transmission and Distribution companies.
•Construction projects within the sector.
