Energy and power

Written by Will Jones

Key developments in 2025

As reported recently by WTW, last year saw a softening in the renewable energy insurance market, with increased capacity and competition in the insurance of wind, solar and battery energy storage (BESS).

In addition to lower rates and increased product innovation, the last year has also seen changes to key policy terms and coverages.  These include lower deductibles and higher sub-limits (e.g. for hail/ wind), wider named peril sets, more generous defects cover (e.g. LEG3), and shorter DSU waiting periods.  A potential consequence of broader covers with lower deductibles is a rise in attritional claims (alongside the pervasive risk of large losses).  It remains to be seen whether this trend continues into 2026.

The last year has also seen a further shift towards multi-participant coinsurance arrangements – particularly in the context of projects and assets with novel technologies.  The arrangements include the use of the (re)insurance tower structures that have been more traditionally associated with oil and gas assets and projects.  These (re)insurance towers will necessitate the adoption, across the market, of effective claims handling protocols.

What to look out for in 2026

We anticipate that 2026 will see a continuation of the claims inflation that we have seen in recent years across all corners of the energy and power market. 

In part, the rising cost of claims is a consequence of delays caused by supply chain issues.  During 2025 we have seen disruption to supply chains caused by geopolitical factors (such as the Trump administration's adoption of broad tariffs) and product scarcity (for example, the ongoing shortage of turbines in the face data centre demand).

Claims inflation has also been a function of the increased cost of work and materials. The cost of steel, spare parts, yard slots, labour, environmental compliance, salvage rates and geopolitical detours have all seen increases – with corresponding increases to repair costs/ claim quantum. 

Claims inflation has a number of potential and negative consequences.  The inflation can result in under-reserving, particularly in the context of long running disputes where reserves were put in place at an early stage, or under insurance.  The increase can also lead to attachment or allocation disputes with excess reinsurers. Relatedly, this can give rise to issues of late notification of losses.

In the context of offshore energy and marine losses, rising repair costs also have the potential to push more incidents towards the threshold of constructive total loss. This gives rise to complications in circumstances where a CTL is declared some time after the date of loss, including around the validity of any NOAs tendered and/or the extent to which the increased cost or repair was the consequence of delay. 

Combatting the rising costs of repair requires adjustment teams to remain realistic about the possibility of claims inflation and/or contingency. It also requires insurers to keep policy limits and sub-limits under close review as each claim progresses.