The risks inherent in the energy insurance market are complex, challenging and potentially catastrophic. They are also ever-evolving, as such emerging threats as climate change, competition and cyberterrorism pose growing risks to energy providers.
"Despite an encouraging uplift during the last 12 months, the energy industry is still beset by some significant challenges," reports Robin Somerville, global communications director for Willis Towers Watson's Natural Resources Industry Group and editor of the firm's 2017 Energy Market Review. These challenges include low oil prices, cost-control pressures, workforce layoffs, onerous legislation and regulation, and the escalating risk of cyber attacks (see sidebar).
|Mother Nature's fury
Of course, climate change also poses growing challenges: The 2017 hurricane season was unprecedented in terms of severity and damage, so it's no wonder that the recent windstorms have caused apprehension in the Energy insurance market, according to Willis Towers Watson's "2018 Marketplace Realities Report." Forecasts by global risk modeling and analytics firm RMS put insured losses from wind, storm surge and inland flood from Hurricane Harvey at $25 billion to $35 billion and for Hurricane Irma at $25 billion to $40 billion — for a potential total of $75 billion, Somerville points out.
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