Driving growth in the energy sector

Covid-19 has sent shockwaves round the globe, causing political unrest, uncertainty and financial discomfort for many business sectors. The energy industry, in particular, experienced a ‘double shock effect’ in the form of strict lockdown measures and a significant drop in oil prices. In March 2020, a report from the BBC highlighted that Brent crude oil dropped to $22.58 US dollars per barrel – the lowest level recorded over the last 18 years. The sudden contraction in demand for crude was driven by a sharp reduction in transport both on the road and by air as governments sought to curb the spread of the disease by limiting both domestic and foreign travel.

The strict measures also meant that many companies had to adapt by moving to a new hybrid way of working, as part of their business continuity plans to keep staff safe and business moving during difficult times. “Before the coronavirus pandemic started, we were doing many face-to-face meetings with our brokers” said, Rohan Davies, divisional managing director of energy at Markel International. “I was doing long haul every other month to visit clients around the world but since the pandemic began, we have not been able to do that.”

Retaining customer relationships

Despite those limitations, the organisation’s Energy team have gone from strength-to-strength in this new hybrid environment by carrying out more calls with brokers to not only maintain strong communication, but also strengthen their relationships with them. The addition of a fully-paperless workflow has also streamlined business processes, which, in turn, has increased productivity and response times to broker requests, according to Davies. “It was those response times to the brokers that has really brought our brokers back to us when they need/needed something doing.” He continued. “When they have an opportunity and they need a quick turn-around, we are a go-to market which gives us the opportunity to get the line sizes we want or the businesses that we need to see.”

Identifying opportunities

As an ongoing process, Davies and his team have had their finger on the pulse of the latest developments, so that they can identify further opportunities for driving company growth, as well as managing and transferring risks more effectively within Markel International’s energy investment class. To spearhead growth in those areas, the team have been busy building a new claims database, which has involved working with a third party to capture their last eight years of data. Using this claims data, Davies notes, has enabled the Energy team to “dig into the details” to see where the claims are/aren’t coming from – allowing the team to pinpoint more avenues to attract new business.

From a risk management perspective, Davies explained that the new system (ERIC) is being used to identify risks before they become an issue, which are further supported by the organisation’s in-house engineer – who possesses over 40 years’ experience in the marketplace and whom has supported the Energy team with negotiating highly, complex industrial risks. Additional support is also on hand from the organisation’s industry-leading claims team, who are “well linked in with us and like to be actively involved in what we’re doing,” said Davies.

Achievements

The Energy team’s recent efforts has enabled them to position themselves with senior level brokers. “On upstream, Ben House really took charge by isolating a specific category/classification of Major and Super Major risk that lends itself well to the expertise we have in-house to deliver complex products, it is here we have seen significant growth in our leadership.” Davies elaborates: “What we have done is tailor our marketing and the efforts that we have made in conjunction with our Distribution Strategy team, who have been instrumental in helping us connect with decision makers at all levels in the broking houses.” The concerted efforts of everyone involved has resulted in the Energy team being able to increase their exposure on target risks, while adding value to the brokers by quoting terms and leading placements.

Energy market

UK Prime Minister Boris Johnson recently announced that traditional gas boilers will no longer be fitted in new-build homes from 2025 and instead, they’ll be replaced with greener alternatives, including: heat pumps/networks, electric radiators and hydrogen boilers. Those who are unaffected by the new rule are encouraged to replace their conventional heating systems for one of the aforementioned options to help the government achieve its goal of net-zero CO2 emissions by 2050.

The government’s move towards carbon neutrality, coupled with the increasing demand for renewable energy (onshore and offshore), is something high on Davies’ radar, which has led to two new appointments in the organisation’s Energy team. “We are starting to hear about gas boilers in peoples’ homes being phased out in the next 10 years or so and electricity is going to be the only way we replace that energy or heating capability,” he explains. “And so, the big change for us is about having our renewable energy team in place to help clients with that transition and that’s why we’ve heavily invested over the last year by hiring two senior underwriters in the marketplace, namely, Tom Baker, head of renewable energy (Singapore) and Charlie Richardson, head of renewable energy underwriting (London).”

Tom Baker joined Markel International last July and since his appointment, he has been busy heading up a renewable energy team in Singapore to tackle the rapidly-growing Asian market. Meanwhile, Charlie Richardson, co-chair of the LMA Renewable Energy Committee, will be starting in October to help lead the renewable offering for London’s wholesale market. His primary tasks will include negotiating deals to bring business in, while onboarding and growing the organisation’s renewable energy team so that it is in a position to benefit from a growing market.

Speaking of the business strategy for the year ahead, Davies says: “On the upstream side of things, we are looking for growth in leadership within the Major and Super Major class of business. Additionally, we’ve been growing our LNG (liquified natural gas) offering – a clean fuel that’s helping our clients through the energy transition – where we’re looking to work with key clients and deploy more capacity in that space to increase our leadership.”

He questions: “Renewable energy is an area that is going to grow massively over the next 10 years, but does that mean that the risk of the energy sector is going to be in decline? There will be a decline in certain areas, but I still think there is a need for oil and gas. We need to help support those clients as they switch their capital expenditure from new oil and gas assets into renewable energy (eg offshore wind farms).”

With clients investing billions in renewable energy projects (eg wind, solar, hydrogen and carbon sequestration), Davies agrees that the organisation is in a strong position as it starts taking this market by storm.

As one of the largest energy underwriting teams, we give energy companies of every size the certainty to be able to concentrate on what they do best. We recognise that the world of energy is constantly evolving. We are evolving with it, continually developing new products and services to reflect an ever-changing environment - looking ahead to tomorrow to give you the freedom to carry on delivering the vital resources that keep our world working. Click here to view our products.

About Markel International:

Markel International is a division of Markel Corporation, a US-based holding company trading on the New York Stock Exchange (NYSE: MKL). Markel International writes insurance and reinsurance business through six divisions and through offices across the UK, Europe, Canada, Latin America and Asia Pacific. Markel International’s insuring entities include Syndicate 3000, Markel International Insurance Company Limited, Markel Insurance SE., and Markel Resseguradora do Brasil S.A.

Its UK national markets business also provides legal and professional fees insurance cover as well as legal and tax consultancy services.