Reinsurance
Product Family

The energy insurance market is in a dynamic phase, with a shift towards newer, renewable energy sources, balanced with more traditional risks. In the latest series of dual interviews with Regional and Product Leaders, Craig Langham, Regional Leader, APAC, and Guillaume Parard, Head of Underwriting, Energy (Downstream, Upstream, Power), APAC and Europe share insights on why local representation and good communication are key in helping energy clients address these evolving challenges.

Why is local communication with energy clients and brokers so important in helping them to manage and transfer their risks?

Guillaume Parard: The dynamics of the energy market mean it’s critical that we are able to communicate effectively with our clients and their brokers in the markets where they operate. There are both global and local trends. We must be able to address these trends alongside our clients and this requires constant communication as we know that global events often have local impacts.

And the needs of our energy clients are changing too. Some may be shifting towards cleaner, less carbon intensive processes, some may be diversifying their portfolio of assets, some may be very active in R&D and developing new technologies. It up to us to understand this and to adapt, but also to anticipate changes and new risks and be available to provide not only insurance solutions, but information and risk mitigation expertise.

We must therefore constantly listen to our clients and brokers locally, and understand wider market dynamics to be relevant and address the individual changing risk profiles. 

Lastly, we have clients of all sizes, with different business models, some of which are long-established players in the energy market, some of which are newer start-ups. It is important for us to have in-house expertise to be able to adapt the discussion and analysis to our clients’ specific risk profiles. Our clients are experts in their fields, many have also had many years of experience having worked on the ground before moving into risk management. This is why we have a constant focus on having expert underwriters, claims and risk prevention experts, to ensure we can provide appropriate solutions.  

Craig Langham: As Guillaume says, credibility is key. These are sophisticated, usually mature, buyers with often complex risk needs. Closeness to the market and effective communication are vitally important.

You mentioned the shift towards cleaner energy sources. How is this affecting the risk transfer needs of clients in the APAC region and how can you help to address those challenges?  

Guillaume Parard: The shift towards cleaner energy sources is certainly happening, but at different paces in different parts of the world. 

To meet climate targets, many clients have been building new in-house capabilities. In many cases, this requires them to acquire new skills sets and to consider the technical challenges and potential risks that this may pose.

We have been working alongside clients to gain and share insights into these risks and help them manage and transfer them. Among other things, we have taken part in in-house seminars with clients, and met with project and site construction managers to discuss plans for the erection of offshore windfarms, for example. 

Our global reach and broad expertise help clients from the very beginning of these projects to understand, minimise, manage and transfer risks. 

As these risks evolve, are you seeing changes in the way these risks are transferred? 

Guillaume Parard: We are. And in response we are looking at ways to provide our clients with traditional and more novel approaches to risk transfer. 

One way in which we are doing that for energy clients is looking at ways to combine the traditional forms of insurance we provide with initiatives on the finance side.

For example, AXA Group currently is exploring the development of Transition Bonds, which are a mechanism for those companies that might not yet be eligible to invest in Green Bonds, which support projects with climate or environmental value-add built into it,  but which nonetheless are making strides towards reducing their carbon emissions. 

As part of a global insurance group like AXA, with expertise in alternative finance, climate science and so on, AXA XL is able to tap into expertise that can help to develop solutions for our clients that go beyond traditional risk transfer.

And taking a more innovative approach also helps AXA Group in its pledge to act against global warming; it has committed to transitioning to a more sustainable world and doubled its green investment target to Euro 24 billion for 2023. 

What are the dynamics of the insurance market in the APAC region and why is having local underwriters and experts on the ground so important?

Craig Langham: We are client-centric, and that means its paramount that we have local distribution and the ability to give our clients local representation in the region. It’s critical to be close to the market, to be able to talk to our clients and brokers in their time zone, and to be able to understand and explain the dynamics of the local market. AXA XL has local representation for all the lines we underwrite in this region. 

The insurance market overall has hardened in the APAC region, particularly in financial lines, and many clients across all sectors are buying less limit because of this price constraint. That highlights how important it is for us to be able to communicate with our clients and have both local knowledge of market dynamics but also specialist knowledge of their sector and their risk profiles. 

As Guillaume has mentioned, for sophisticated energy clients, with often complex challenges, this is particularly important. We need to demonstrate that we have credibility and deep, local and global understanding of their business.

Subscribe

More Articles

Global Asset Protection Services, LLC, and its affiliates (“AXA XL Risk Consulting”) provides risk assessment reports and other loss prevention services, as requested. This document shall not be construed as indicating the existence or availability under any policy of coverage for any particular type of loss or damage. AXA XL Risk. We specifically disclaim any warranty or representation that compliance with any advice or recommendation in any publication will make a facility or operation safe or healthful, or put it in compliance with any standard, code, law, rule or regulation. Save where expressly agreed in writing, AXA XL Risk Consulting and its related and affiliated companies disclaim all liability for loss or damage suffered by any party arising out of or in connection with this publication, including indirect or consequential loss or damage, howsoever arising. Any party who chooses to rely in any way on the contents of this document does so at their own risk.

US- and Canada-Issued Insurance Policies

In the US, the AXA XL insurance companies are: AXA Insurance Company, Catlin Insurance Company, Inc., Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Specialty Insurance Company and T.H.E. Insurance Company. In Canada, coverages are underwritten by XL Specialty Insurance Company - Canadian Branch and AXA Insurance Company - Canadian branch. Coverages may also be underwritten by Lloyd’s Syndicate #2003. Coverages underwritten by Lloyd’s Syndicate #2003 are placed on behalf of the member of Syndicate #2003 by Catlin Canada Inc. Lloyd’s ratings are independent of AXA XL.
US domiciled insurance policies can be written by the following AXA XL surplus lines insurers: XL Catlin Insurance Company UK Limited, Syndicates managed by Catlin Underwriting Agencies Limited and Indian Harbor Insurance Company. Enquires from US residents should be directed to a local insurance agent or broker permitted to write business in the relevant state.