Specialty MGA

Risks to watch in 2023

1 February 2023

A version of this article was first published in the February 2023 edition of FA News.

 

The drive towards renewable energy

At the heart of the global actions to limit climate change is the drive for clean growth and the transition away from fossil fuels towards renewable energy. The recently held COP27 in Egypt resulted in further progress for Africa in particular, with the formation of the ‘Africa Just and Affordable Energy Transition Initiative’, which aims to ensure that access to cheap energy is provided to at least 300 million Africans and the proportion of electricity generated by renewable energy is increased by 25%, by 2027.

South Africa, which is the 13th largest producer of greenhouse gases worldwide, has recently demonstrated its own desire for change with its ‘Just Energy Transition Partnership Investment Plan’, which is a funding package of $98 billion over the next five years to start the country’s energy transition.

The drive towards renewable energy will undoubtably have an impact on insurance risks in this region in 2023. Insurers must adapt to understand the new risks and market specifics that come from the surge in demand for a carbon neutral based economy.

The construction and maintenance involved in the generation of renewable energy is likely to be a big area of focus, with hydro and geothermal energies, wind farms, solar plants and up-scaling of the power grids. New technologies such as carbon capture, storage plants and hydrogen plants involve a variety of risks that the African insurance market will be able to handle, to reduce its reliance on international reinsurance markets.

With Lloyd’s of London announcing in 2020 that they will phase out fossil-fuel insurance by 2030, a policy also followed by the key continental market providers, the African insurance market has the unique opportunity to adapt through increasing capacity, competencies and training of personnel. The standardisation of wordings, regulations and jurisdictions will be continued across the continent, to reinforce contract certainty and provide a sound playing field for 2023, and beyond.

You can read the original article on the FA News website:

https://www.fanews.co.za/publication/pdf_287_fanewsfebruary_2023  

A picture of Philippe Bara from Specialty MGA UK

Philippe Bara

Head of Energy Portfolio, Specialty MGA

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