Disruption to energy production is a critical factor along with political and regulatory change. These areas remain complex and worthy of close attention. In our experience the biggest business problems revolve around the breakdown or disruption to plant and machinery, contractual liabilities and financial loss. Insurance underwriters are very much aware of this exposure and often seek to impose onerous operating conditions and warranties.
There is no point spending money on insurance if it isn't going to pay out when you most need it. If a loss occurs the financial impact can be devastating, that's why speed of claims settlement and loss recovery support are absolutely critical.
Fully understanding trading activities, checking your maintenance and control systems, being aware of potential supply chain disruption impact and assessing environmental exposures is extremely important. With a deep understanding of your specific risks we can guide you to ensure maximum insurance cover based on your own balance sheet strength, cash flow and risk appetite.
Trading continuity is vital. It is critical that you have regular equipment maintenance programmes in place, carried out by qualified staff/third parties.
This programme must demonstrate in writing that regular inspections have been carried out, repair work completed and a written scheme of working is recorded.
The knock on effect of primary or secondary supplier failure can very quickly hit your income and profit. It is critical that supply chain risk is properly considered and the knock on effect of a failure, including the potential for contract loss.
Energy industry related insurance cover is only available via certain insurance markets. The availability of cover from these insurers depends heavily on what underwriters perceive as 'moral hazard'. They are wary of companies that apply little or no risk management, are reluctant to act upon insurer recommendations and generally take a laissez faire approach to running their businesses .If you want cover and realistic prices, strong management control and accountability must be demonstrated, along with business management experience.
We were asked by a waste-to-energy producer to carry out a mid term review of their current arrangements.
The company had been growing at pace but were concerned with administrative delays and confusion which they felt was the fault of their existing broker, as well as problems over premium financing. This was causing worry for the Board of the company.
Our task was to review existing arrangements and advise on the best way to resolve the issues over premium finance payments.
This was a complex business involved in different areas of energy production across the UK. It became clear that the insurance programme itself was administratively complicated, and was in fact a number of different insurance policies covering each location.
It was clear that communication between company and its broker had become confused and this was causing delay. Each delay was compounding a previous delay.
It was also clear the company wasn't complying with some very severe warranties that had been written into the insurance contract. These warranties were written on a page well within the policy wording. We felt this left the company exposed to a significant financial loss through no fault of its own. The company insurance broker hadn't made these warranties clear.
It became clear that a revamp of the insurance programme was vital. The policy cover needed to be written on a blanket basis covering all locations, rather than numerous individual policies and sums insured. The premium finance situation was chaotic. Mid term adjustments hadn't been invoiced properly, there were delays on return premiums and there was a lack of clarity on the actual monthly payments due.
Once appointed as the new insurance broker to the company we tidied up all these issues over the first two weeks and created a better administrative system. This eased all concerns of the company's Board.