Published on 19 February 2025

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Power Market Update H1 2025

Published on 19 February 2025

Following a relatively benign wind season and operational losses being lower compared to previous years, conditions for buyers improved throughout 2024.

The two most significant US hurricanes of the season (Milton and Helene) caused relatively little disruption to the insurance market. In general, we are seeing improvements in the rating environment and a shift away from the hard market terms and conditions that prevailed for the past few years. Early indications of treaty renewals suggest that Natural Catastrophe pricing has dropped more than anticipated off the back of excellent results in 2023 and 2024, and this will further strengthen the ability to drive competitive pricing.

Several significant market movements in London have introduced new teams, leading to increased capacity. For example, Volt and Tokio Marine HCC are strategically positioning themselves for more prominent leadership roles in 2025. This development has provided numerous leadership options across the London market, a scenario we have not observed in quite a few years, which is excellent news for insureds. The Direct & Facultative (D&F) property market is softening at a quicker pace than the Power Generation market, resulting in heightened competition. Consequently, there has been a noticeable shift in appetite as these markets seek to recover lost D&F income by underwriting more power generation businesses. This may be influenced in the US by the recent California wildfires, although it is still too early to assess the full extent of the impact.

Capacity for coal-fired risks remains stable, albeit under intense scrutiny from underwriters due to aging assets and the challenges posed by Environmental, Social and Governance (ESG) factors. The pressure on Business Interruption (BI) volatility and values-related clauses is beginning to ease, although these themes still require attention to maximize current market conditions.

Accurate value reporting and managing supply chain issues continue to be critical aspects that will help our clients benefit optimally from this softening market.