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Energy and Power Insurance in China

  • September 2015
  • -
  • Finaccord
  • -
  • 41 pages

Energy and Power Insurance in China 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 China.

In addition to showing how its value has changed since 2010, analysis of the Chinese 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 Chinese 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 China (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 China

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
China is the world's largest importer of oil… 7
… and is also a fairly significant producer of it 7
The number of both offshore and onshore rigs has risen but many are not actively drilling 10
The discovery of deep water oil fields has shaped investment in the oil sector in China 11
Production at China's largest onshore oil fields is likely to have peaked 11
Shale gas offers vast potential in China albeit many formations are relatively expensive to reach 11
Several long-distance pipeline links have been built or are under construction in China 12
The oil refining sector has undergone modernisation and consolidation in recent years 12
Competitive environment 12
CNPC and Sinopec together control China's upstream and downstream oil and natural gas markets 12
CNOOC is responsible for offshore oil exploration and production 12
Foreign oil companies participate mainly through production-sharing contracts and joint ventures 13
Gas distribution is largely controlled by city-specific and regional companies 13
Energy (oil and gas) insurance market value, growth and segmentation 13
The Chinese energy insurance market has experienced fairly rapid growth in recent years 13
Construction and property cover account for the majority of energy insurance premiums 15
Underwriter market shares 17
Upstream, midstream and downstream insurance 17
PICC is the dominant underwriter in China's energy insurance market… 17
… and captives are not yet used to a significant degree for domestic risks 17
Key brokers 19
Kunlun Insurance Brokers and Jiang Tai Insurance Brokers are the most influential intermediaries… 19
… although there are other important competitors including Aon-COFCO, JLT, Marsh and Willis 19
Future outlook 20
Oil and natural gas production 20
Energy (oil and gas) insurance 22
Growth in the value of the Chinese energy insurance market is likely to remain robust… 22
… with premiums forecast to exceed USD 500 million by 2018 22
30 POWER INSURANCE 25
Power market and competitor background 25
Power generation 25
Generation of renewable power has been growing at more than twice the rate of that of conventional power 25
Coal remains by far the most important power source in China 25
Generation of nuclear power is set to expand rapidly 26
Hydropower is by far the most developed renewable energy source… 27
… albeit wind power is becoming increasingly significant 27
China is committed to generating 20% of its power from non-fossil fuel sources by 2030 28
Competitive environment 28
Electricity generation and transmission is dominated by state-owned companies 28
China Huaneng Group operates more than 80 mainly coal-fired plants 28
China Guodian generates about 10% of its output from hydropower 29
Power insurance market value, growth and segmentation 29
The renewable power insurance market has been rising at a nominal compound annual rate of over 20% 29
…driven by the expansion of the underlying renewable power sector… 30
… albeit policy pricing is sometimes inefficient in both this sector and the conventional power market 31
Coal-fired stations are likely to account for more than 60% of the total power insurance market 31
A paucity of claims data has hindered pricing of risks in the wind power sector 31
Cover for business interruption accounts for close to 25% of the total Chinese power insurance market 32
Property insurance for conventional power is the most valuable segment of the total market 33
Underwriter market shares 35
Conventional power insurance 35
PICC is likely to underwrite between 40% and 50% of conventional power insurance premiums in China 35
CNIP (the Chinese Nuclear Insurance Pool) has direct underwriting capacity of close to USD 900 million 35
Renewable power insurance 37
Underwriting market shares in renewable power insurance are likely to be subject to more volatility 37
Key brokers 38
Captive brokers play an important role in the Chinese power insurance market 38
Future outlook 38
Power generation 38
Ambitious plans have been made to expand generation through diverse non-carbon sources 38
Power insurance 40
Growth in renewable power insurance will comfortably outpace that for conventional power cover 40

LIST OF GRAPHICS / TABLES
00 EXECUTIVE SUMMARY 1
Key market data for energy (oil and gas) and power insurance in China 2
10 INTRODUCTION 3
20 ENERGY (OIL AND GAS) INSURANCE 7
Oil production and imports in China, 2010 to 2014 8
Natural gas production and imports in China, 2010 to 2014 9
Oil and natural gas production (segmented between domestic consumption and exports) and imports in China, 2010 to 2014 (table) 10
Underlying oil and natural gas production and import infrastructure in China, 2010 to 2014 (table) 11
Energy (oil and gas) insurance premiums in China segmented between upstream, midstream and downstream, 2010 and 2014 14
Energy (oil and gas) insurance premiums in China segmented between upstream, midstream and downstream, 2010 and 2014 (table) 14
Energy (oil and gas) insurance premiums in China segmented by type of risk, 2014 15
Energy (oil and gas) insurance premiums in China cross-tabulated between upstream, midstream and downstream and type of risk, 2014 16
Energy (oil and gas) insurance premiums in China cross-tabulated between upstream, midstream and downstream and type of risk, 2014 (table) 17
Estimated market shares of total energy (oil and gas) insurance underwriters in China, 2014 18
Estimated market shares of total energy (oil and gas) insurance underwriters in China, 2014 (table) 19
Oil and natural gas production in China, 2018 (forecast) (low and high oil price scenarios) 21
Oil and natural gas production in China, 2018 (forecast) (low and high oil price scenarios) (table) 22
Energy (oil and gas) insurance premiums in China segmented between upstream, midstream and downstream, 2018 (forecast) (low and high oil price scenarios) 23
Energy (oil and gas) insurance premiums in China segmented between upstream, midstream and downstream, 2018 (forecast) (low and high oil price scenarios) (table) 24
30 POWER INSURANCE 25
Power generation in China segmented between conventional, renewable and other sources, 2010 to 2014 25
Power generation in China segmented between conventional, renewable and other sources, 2014 (detailed breakdown) 26
Power generation in China segmented between conventional, renewable and other sources, 2010 to 2014 (detailed breakdown) (table) 27
Power insurance premiums in China segmented between conventional, renewable and other sources, 2010 and 2014 30
Power insurance premiums in China segmented between conventional, renewable and other sources, 2010 and 2014, (table) 30
Power insurance premiums in China segmented between conventional, renewable and other sources, 2014 (detailed breakdown) 32
Power insurance premiums in China segmented by type of risk, 2014 33
Power insurance premiums in China cross-tabulated between conventional, renewable and other sources and type of risk, 2014 34
Power insurance premiums in China cross-tabulated between conventional, renewable and other sources and type of risk, 2014 (table) 35
Estimated market shares of conventional power insurance underwriters in China, 2014 36
Estimated market shares of conventional power insurance underwriters in China, 2014 (table) 36
Estimated market shares of renewable power insurance underwriters in China, 2014 37
Estimated market shares of renewable power insurance underwriters in China, 2014 (table) 38

Power generation in China segmented between conventional, renewable and other sources, 2018 (forecast) 39
Power generation in China segmented between conventional, renewable and other sources, 2018 (forecast) (table) 39
Power insurance premiums in China segmented between conventional, renewable and other sources, 2018 (forecast) 40
Power insurance premiums in China segmented between conventional, renewable and other sources, 2018 (forecast) (table) 41

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