After a quiet and relatively uneventful series of years for the upstream energy market, recent macroeconomic and socio-political developments have brought upstream energy back into the limelight. The energy supply still depends heavily on hydrocarbon sources. Energy security concerns have forced Western economies to find new suppliers and the energy transition is forcing the entire sector to think in new, innovative ways.
In this context, offshore energy underwriters are key enablers and drivers of the rapid transition to sustainable energy, according to Frank Streidl, Chairman of the Offshore Energy Committee of the International Union of Marine Insurance (IUMI). . Flexible thinking and a willingness to develop bespoke products will be required to deliver the full lifecycle solutions needed.
Addressing delegates at the IUMI 2022 conference in Chicago, he told the audience of insurance professionals that to achieve the required transition to sustainable offshore energy, the supporting infrastructure must be upgraded and moreover large wind farms developed further offshore at deeper water sites. The turbines will increase in size, with a typical new turbine power expected of 15 MW and 200 m in height by 2030. At the same time, the development of offshore carbon capture and storage facilities is also progressing. These types of innovative projects need to be backed by insurance programs that can help de-risk these investments and free up needed capital flows.
“The world is in transition, and it is the insurance industry’s self-imposed responsibility to help businesses decarbonize in a safe way. We must play our part by developing new products, continuing to support proactive with new technologies,” said Frank Streidl.
“The energy transition requires a joint effort of industry, government, regulator, consumer and insurance to be successful. We can be proud of what has been achieved to date. However, oil and gas still account for more than 90% of premiums in the offshore energy market.Offshore renewables offer innovative underwriters the opportunity to develop products for our customers,” added Frank Streidl.
Offshore floating wind and solar farms, for example, hold the potential to deliver large-scale clean energy in the future. But with increasing distance from shore, installation, operation and maintenance issues are more risky, including weather perils. While cabling, foundation and mechanical issues have so far been the source of the majority of claims for the offshore renewable energy sector, the risk profile of offshore renewable assets continues to evolve. The energy insurance industry wants to work with policyholders to respond with appropriate insurance coverage that reflects changing risks, as well as support companies in their management.
Source: IUMI