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What are the insurance implications of these issues?
Withall this inmind, there are several notable trends developing in the insurance space. In energy transition terms, as oil majors increasingly invest in renewable technologies, insurers too have been moving into the renewables market, by acquiring specialist practices or upskilling underwriters. Indeed, Lloyd’s has indicated that the market will phase out renewal of existing insurance policies for thermal coal, oil sands and new Arcticenergyexplorationoverthenextdecade 61 . The pressure on insurers as institutional investors to shift away from investing in fossil fuels is also growing stronger. As different types of renewable energy gain momentum across the globe, marrying sector-specific underwriting expertise with jurisdictional knowledge is becoming a priority. Offshore wind is a prime example. The technology was developed and first deployed inEurope,andmost of the technical underwriting experience resides in London.
However, now that offshore wind power generation is taking off in Asia, an on-the- ground understanding of the commercial and regulatory landscape in China, South Korea, Vietnam or Japan is vital, too. Going forward the same will apply in the US, as the technology starts to gain traction there.
There has already been significant shareholder
pressure to defund coal, and hydrocarbons – especially oil – look to be the next target. With everything moving in that direction, insurers are quickly looking to diversify by adding renewables risks to their portfolios. - Paul Lowrie, Partner, Clyde & Co, London
61 The Guardian https://www.theguardian.com/business/2020/dec/17/lloyds-market-to-quit-fossil-fuel-insurance- by-2030
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