Insurers and brokers must help energy companies tackle reputational risks and heightened regulatory demands as part of the global energy transition, Marsh-JLT specialty president Lucy Clarke said.
Speaking Monday at the Houston Marine and Energy Conference, the executive said the energy insurance industry needed to better understand the pressures from new forms of activism and environmental regulations faced by insureds.
“Our clients are having to deal with [heightened] reputational risks.”
“In the past we thought of it more as something that happened in the aftermath of something terrible, such as a pollution event or disaster,” she said.
The global energy transition, or clean energy transition, is the process by which energy majors moving energy production from finite to renewable sources.
Political activism is a particular concern among energy companies seeking to raise shareholder support as they move to diversify.
Energy firms face a delicate balancing act among stakeholders as they move from more profitable, but less politically palatable fossil fuels to less profitable but more publicly appealing renewables.
Speaking at the conference Clarke also highlighted the complex decisions insureds had to make as a result of from new regulation.
Citing the forthcoming IMO 2020 legislation, the executive said some firms struggled because the pace of regulatory change meant measures such as installing scrubbers on ships could quickly become out of date.
“What is the longevity of the acceptability of scrubbers as an option?” she said.
Clarke added that the energy insurers needed to further embrace technology and innovation.
According to Clarke, a recent Marsh-JLT survey of 900 experts and 1200 CEOs found that climate risk and cyber security were their top two concerns. The study respondents were taken from a range of different industries.