At the end of 2023, we set out our expectations for the renewable energy insurance market in 2024.
We’ve opened up our views for discussion here, and have revisited our suggestions in the context of how the year developed.
Resignations. Reports from various recruiter organisations consistently point to compensation-driven high churn. The organisations that have reduced this tendency over 2024 have been those prepared to invest in teams, ensure internal promotion and offer hybrid flexibility for post-Covid workforces.
M&A. Coming off the back of a poor M&A market in 2023, industry observers anticipated that – as we noted – falling interest rates would drive more activity. This was the case in Europe, where the regulatory environment is beginning to favour cross border transactions – which helped seal Generali’s acquisition of Liberty Mutual midway through the year. In the U.S., the market’s largest deal was seen with Brookfield Reinsurance’s acquisition of American Equity Investment Life. In the UK dealflow was similarly improved on 2023, with 94 transactions recorded in H1, according to EY. But, although full year data has yet to be released, according to MarshBerry, retail broking M&A is up on 2023, unlike Specialty, which is still trailing last year’s numbers.
AI. Everyone’s favourite topic in 2024, but what about uptake in insurance? Insurers talk publicly as to their plans to integrate AI into their offerings but, as illustrated by an Earnix survey, few have yet to fully implement the technology. Our prediction on the challenge of integrating legacy data seems to be holding out for now.
Scrutinised Limits. Amongst all the market trends of 2024, the pushback on limits by insureds seemed most embedded. Nat Cat events continued to exert a toll on underwriting capital, notably in the Southern U.S., resulting in a tightening of sublimits for cover. Claims inflation remains stubbornly high, although falling against 2023, with casualty limits remaining broadly static with only some movement on targeted risks.
Diversified Cleantech. While a number of key drivers for expanded clean tech offerings persisted in 2024, overall, the market battled structural challenges in key geographies arising from higher costs of capital, legislative hurdles and a delayed supply chain. And while we saw some key announcements – such as the UK Government committing £22bn to CCS – the picture elsewhere is mixed. Chinese battery OEMs made progress towards commercialising sodium-ion technology, but we didn’t particularly see new innovations or meaningful progress in technologies that have been in the wings for some time – such as floating solar, floating wind or tidal. However, in a move that took many by surprise, nuclear saw a late rally, as the tech giants committed to nuclear power for future data centre demand.
Shackled supply chain. High competition for raw materials throughout the renewables supply chain – ranging from steel for turbines, polysilicon for solar, and lithium for batteries has all conspired to cause project delays in 2024. But as we noted a year ago, with over 70 elections taking place globally, the drive to reshore manufacturing and secure economic stimulus will drive new supply chain development, potentially adding new delays to component supply. In the U.S. this has become apparent with delays to new battery manufacturing facilities, which will drag on projects slated to deploy locally manufactured equipment.