The global shift in energy generation, supply, and demand entails technological, economic, and social changes to create a sustainable and reliable energy system. This involves modifying energy production, consumption, and infrastructure to reduce emissions, enhance efficiency, and improve security, while recalibrating the energy mix to include both fossil and non-fossil fuels.
What’s happening
- Climate change and biodiversity/nature loss is causing companies across all sectors to seek emissions reductions, meet net zero pledges, and transition to renewable energy.
- Climate disasters are becoming more prevalent, and insured losses from natural catastrophes are increasing.
- As a result, insurers are re-evaluating their approaches to underwriting climate and natural catastrophe risk. Large parts of the world are becoming uninsurable and even where insurance cover is available, insurers are updating their policies to exclude high-risk activities.
- Insurers are increasingly looking at their own supply chain and committing to invest more in green sectors and less in carbon-intensive sectors.
- There is a growing market of renewable energy projects, like solar, wind and hydro, where adequate insurance is fundamental to project success.
- The energy transition also introduces risks like increased politicization; the rise in climate and greenwashing claims; new and emerging sustainable law and regulation; and an increasingly divergent regulatory landscape.
How we can help insurer clients
- Supporting with their commitments to underwrite more renewable energy projects.
- Helping them embrace technological innovation, which is at the heart of the energy transition.
- Advising them on the rapidly changing global regulatory and political environment.
- Identifying, managing and mitigating climate litigation and reputational risks (including greenwashing and shareholder activism).
- Helping to ensure that their board and senior managers meet their supervisory requirements to properly identify, assess and manage the firm’s exposure to climate-related risks.
How we can help energy sector clients
- Risk management and compliance – advising on insurance risks and considerations associated with their energy transition plans.
- Policy drafting, review, structure and placement – advising on how their energy transition plans interact with their insurance coverage and on any coverage gaps/exclusions.
- Coverage advice and claims notification – advising in the event they suffer losses relating to greenwashing, climate change, nature and biodiversity.
- Dispute resolution – supporting where an insurance claim relating to climate change, nature and biodiversity is denied by the insurer.