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Energy and Power Insurance in Canada

  • September 2015
  • -
  • Finaccord
  • -
  • 42 pages

Energy and Power Insurance in Canada is a report and market data file about the current and future outlook for the insurance of risks associated with the fast-evolving energy (oil and gas) and power sector in Canada.

In addition to showing how its value has changed since 2010, analysis of the Canadian energy insurance market sub-divides it both by type of operation (i.e. upstream, midstream and downstream) and by type of risk (i.e. business interruption, construction, control of well / OEE, environmental liability, general liability, property and other) with these two splits then cross-tabulated against each other to identify the most valuable market segments. In addition, its value (split by type of operation) is forecast to 2018 and estimates for the market shares of energy insurance underwriters are provided, expressed as percentage ranges (e.g. 5.0% to 7.5%).

Market value data spanning 2010 to 2014 (with a forecast to 2018) is also provided for the Canadian power insurance sector with segmentations in this case provided by power source at both a high level (i.e. conventional, renewable, other) and a detailed level (i.e. coal, gas, nuclear and oil in the conventional segment, and biomass, hydro, solar and wind in the renewable segment), as well as by type of risk (i.e. business interruption, construction, liability, property and other). Once again, these splits are cross-tabulated against each other and market shares for underwriters of power insurance are estimated as percentage ranges.

Over and above this unique market data, the study also examines the market drivers for both energy and power insurance in Canada (e.g. trends in oil and natural gas production and imports, trends in power generation segmented by source) plus the role played by captive and mutual underwriters (including the approximate percentage of the respective market values that they insure). In addition, it identifies the brokers with the most significant involvement in these two sectors, and considers how changes in the underlying energy and power sectors are likely to impact the associated insurance markets.

Table Of Contents

Energy and Power Insurance in Canada
TABLE OF CONTENTS
00 EXECUTIVE SUMMARY 1
10 INTRODUCTION 3
What is this report about and what is its rationale? 3
Several factors underpin the rationale for producing global research about energy and power insurance… 3
… including its worldwide value of more than USD 235 billion in 2014… 3
… and the growth of hydraulic fracturing (fracking), deepwater drilling, solar power and wind power 3
Methodology 3
Research program 3
Sources 3
Definitions 4
Energy (oil and gas) insurance 4
The energy insurance market segments between the upstream, midstream and downstream sectors… 4
… and by several types of cover, including one specific to upstream insurance 4
Power insurance 4
Power insurance covers the conventional, renewable and other power sectors 4
Premiums 4
Abbreviations 5
Finaccord 5
20 ENERGY (OIL AND GAS) INSURANCE 7
Energy (oil and gas) market and competitor background 7
Production, imports and associated infrastructure 7
Boosted by exports, Canadian oil production has increased rapidly in recent years… 7
Substantial investment is occurring in new pipeline and rail infrastructure 10
The construction of new refineries may be required in future 11
Low oil prices place a question mark over the future viability of tar sands production 11
Competitive environment 11
There are hundreds of firms involved in upstream, midstream and downstream operations 11
… albeit the midstream and downstream are less fragmented than the upstream 11
Energy (oil and gas) insurance market value, growth and segmentation 12
The Canadian energy insurance market has been growing steadily in both nominal and real terms 12
Property and business interruption cover together account for just under 55% of the total market value… 13
… with downstream property cover the largest single energy insurance segment overall 14
Many upstream assets are located in minimal risk exposure areas, thereby limiting premiums… 16
Underwriter market shares 17
Upstream insurance 17
The leading upstream underwriter controls between 15% and 23% of this segment… 17
Midstream and downstream insurance 19
AIG, Allianz and Zurich are likely to be the leaders in midstream and downstream insurance… 19
… with the presence of captives again comparatively modest 19
Broker market shares 21
A significant number of Canadian brokers possess expertise in the energy insurance market 21
Future outlook 23
Oil and natural gas production 23
Under a low oil price scenario, future upstream and downstream development is likely to slow… 23
Energy (oil and gas) insurance 25
… albeit the energy insurance market value is likely to rise in nominal terms whatever the oil price trend 25

Market growth will not differ much between the upstream, midstream and downstream segments… 25
… even though investment is anticipated in midstream and downstream infrastructure 25
30 POWER INSURANCE 28
Power market and competitor background 28
Power generation 28
Renewable power has been growing at a slightly higher rate than conventional power… 28
… with hydropower the dominant power source overall 28
Canada's electricity market can be segmented into three main regional categories 29
By 2035, renewable power is projected to account for at least 65% of total power 29
Competitive environment 30
Canada has a diverse power market albeit hydropower-focused companies are dominant 30
Power insurance market value, growth and segmentation 31
Conventional power insurance has outgrown renewable power insurance in recent years… 31
…driven by increasing premiums for conventional power stations… 32
… while premium rates for renewable power insurance have tended to be flat 33
Unsurprisingly, hydropower insurance is the largest power insurance segment by power source 33
Property insurance is the most valuable segment within the total power insurance sector… 34
… although cover for business interruption is especially important within conventional power insurance 35
Power insurance underwriter market shares 37
Captive and mutual insurers are comparatively prominent in the Canadian power insurance market… 37
… which is otherwise led by Allianz and Zurich 37
Nuclear power risks are dealt with by the NIAC 37
Key brokers 39
Future outlook 39
Growth in renewable power generation is likely to accelerate up to 2018… 39
… causing a similar advance in the associated insurance market 41 ENERGY AND POWER INSURANCE IN

LIST OF GRAPHICS / TABLES

00 EXECUTIVE SUMMARY 1
Key market data for energy (oil and gas) and power insurance in Canada 2
10 INTRODUCTION 3
20 ENERGY (OIL AND GAS) INSURANCE 7
Oil production and imports in Canada, 2010 to 2014 7
Natural gas production and imports in Canada, 2010 to 2014 8
Oil and natural gas production (segmented between domestic consumption and exports) and imports in Canada, 2010 to 2014 (table) 9
Underlying oil and natural gas production and import infrastructure in Canada, 2010 to 2014 (table) 10
Energy (oil and gas) insurance premiums in Canada segmented between upstream, midstream and downstream, 2010 and 2014 12
Energy (oil and gas) insurance premiums in Canada segmented between upstream, midstream and downstream, 2010 and 2014 (table) 13
Energy (oil and gas) insurance premiums in Canada segmented by type of risk, 2014 14
Energy (oil and gas) insurance premiums in Canada cross-tabulated between upstream, midstream and downstream, and type of risk, 2014 15
Energy (oil and gas) insurance premiums in Canada cross-tabulated between upstream, midstream and downstream, and type of risk, 2014 (table) 16
Estimated market shares of upstream energy (oil and gas) insurance underwriters in Canada, 2014 18
Estimated market shares of upstream energy (oil and gas) insurance underwriters in Canada, 2014 (table) 19
Estimated market shares of midstream and downstream energy (oil and gas) insurance underwriters in Canada, 2014 20
Estimated market shares of midstream and downstream energy (oil and gas) insurance underwriters in Canada, 2014 (table) 21
Estimated market shares of energy (oil and gas) insurance brokers in Canada, 2014 22
Estimated market shares of energy (oil and gas) insurance brokers in Canada, 2014 (table) 23
Oil and natural gas production in Canada, 2018 (forecast) (low and high oil price scenarios) 24
Oil and natural gas production in Canada, 2018 (forecast) (low and high oil price scenarios) (table) 24
Energy (oil and gas) insurance premiums in Canada segmented between upstream, midstream and downstream, 2018 (forecast) (low and high oil price scenarios) 26
Energy (oil and gas) insurance premiums in Canada segmented between upstream, midstream and downstream, 2018 (forecast) (low and high oil price scenarios) (table) 27
30 POWER INSURANCE 28
Power generation in Canada segmented between conventional, renewable and other sources, 2010 to 2014 28
Power generation in Canada segmented between conventional, renewable and other sources, 2014 (detailed breakdown) 29
Power generation in Canada segmented between conventional, renewable and other sources, 2010 to 2014 (detailed breakdown) (table) 30
Power insurance premiums in Canada segmented between conventional, renewable and other sources, 2010 and 2014 32
Power insurance premiums in Canada segmented between conventional, renewable and other sources, 2010 and 2014 (table) 32
Power insurance premiums in Canada segmented between conventional, renewable and other sources, 2014 (detailed breakdown) 34
Power insurance premiums in Canada segmented by type of risk, 2014 35

Power insurance premiums in Canada cross-tabulated between conventional, renewable and other sources and type of risk, 2014 36
Power insurance premiums in Canada cross-tabulated between conventional, renewable and other sources and type of risk, 2014 (table) 36
Estimated market shares of total power insurance premiums of underwriters in Canada, 2014 38
Estimated market shares of total power insurance premiums of underwriters in Canada, 2014 (table) 38
Power generation in Canada segmented between conventional, renewable and other sources, 2018 (forecast) 40
Power generation in Canada segmented between conventional, renewable and other sources, 2018 (forecast) (table) 40
Power insurance premiums in Canada segmented between conventional, renewable and other sources, 2018 (forecast) 41
Power insurance premiums in Canada segmented between conventional, renewable and other sources, 2018 (forecast) (table) 42

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