Insurance 2023 - the year ahead
Coverage challenges via arbitration in Asia will increase
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Americas, Asia Pacific, UK & Europe
Contentious insurance claims likely to rise as a result
The impact of geopolitical factors, most notably the Russia-Ukraine war, as well as a number of other supply issues, have led to higher energy prices throughout 2022. Those prices will stay high into 2023. As a result of this and the need to increase supply in the short term to keep pace with demand and avoid power outages, particularly in Europe, there will be a need to re-commission older, mothballed assets. Facilities and oil/gas fields which could not previously be run economically will also become viable again. While renewable energy investment will continue, the urgency of the European energy situation will mean that fossil fuels will still play a very significant short to medium-term role.
There are two significant effects of this. Firstly, notwithstanding the current carbon reduction initiatives and greener technological investment, carbon emissions will continue to increase in 2023 on the basis that older fossil fuel sources and facilities tend to be “dirtier” than newer ones e.g. coal fired power stations.
Secondly, aged assets, particularly those which have previously been mothballed and possibly not properly maintained, are likely to have a higher frequency of incidents which give rise to insurance claims next year. As most insurance wordings available in the market still offer “new for old” cover, claims for these types of assets are likely to be very contentious when the loss is due to ageing and deterioration rather than a traditional fortuitous event.