Everen is facilitating the global transition to a greener economy by providing an insurance solution to all types of energy companies, both old and new projects, Bertil Olsson, CEO of the Bermuda-domiciled energy insurance mutual, told Captive Intelligence.
Everen Limited, formerly known as Oil Insurance Limited (OIL), was established in 1972 to address the increasingly unmet needs of the energy insurance market for capacity, coverage, and claims payment certainty.
When it launched 50 years ago it had 16 members, and now has 64 with close to $3.5bn in shareholder equity.
While the search for affordable capacity has always been a challenge to some degree, the recent moves by (re)insurers to begin exiting some sectors or pulling back as they look to meet their own ESG related targets has created additional market tension.
Olsson believes such an approach is short-sighted and is where Everen’s attitude differs from parts of the commercial market.
“If you go to these people [oil & gas companies] and say, I want to insure the new low carbon operations but not the old traditional energy operations, they’re going to tell you the old stuff is generating the money to fund the new stuff,” Olsson said.
“If the old stuff can’t be insured, then they won’t risk that cash into the new stuff. So, we’re actually looking at the mutual as being a facilitator for the transition, and that’s exactly the way our members see it.”
Oil and gas companies are struggling to get coverage in the commercial market due to some (re)insurers beginning to restrict cover for traditional oil and gas operations.
“In contrast, we don’t have any specific requirements or restrictions as long as it fits within the definition of energy,” Olsson said.
The Net-Zero Insurance Alliance (NZIA) now has 29 (re)insurers as members, representing around 15% of total global premium volume.
Olsson stressed the green energy transition is incredibly important to Everen, despite providing cover for large oil and gas companies.
“We’re not climate change deniers, but we take a very pragmatic approach,” he said.
“We’re looking at where the investments for the new green energy technology is coming from and to a large extent it is coming from the traditional energy companies.”
Olsson said whether the company is a more traditional energy operation or newer energy operation, the reasons they are choosing to join the mutual are essentially the same.
“It is the long-term stability that they’re looking for,” he said. “We’re not immune to volatility in our pool, but the volatility is less and the predictability is higher with our mutual than what you see in the commercial market.”
Captive Intelligence recently published a long read on how rate and capacity challenges are leading to more companies to consider utilising captivs or self insurance structures for renewable energy.
The 64 members today are insuring around $3.5tn of assets in the Everen pool. He said the company’s definition of energy is “fairly broad”.
Members of the mutual include oil and gas operations, refining, chemical, petrochem, power generation, mining as well as the low carbon technologies, such as, wind, solar, geothermal, biofuel, biogas, hydrogen, carbon capture and storage, and battery technology.
“All of that fits within our definition of energy,” Olsson said.
Olsson stressed that once a company is a member of the mutual, it doesn’t kick anyone out for having claims.
“There’s a premium mechanism for the repeat offender, so to speak, they might actually pay a little bit more, which then reduces the burden for the rest of the members,” he said.
“But there’s no absolute straight correlation between a member’s individual claims and their premium.”
He said that captives in general can be a very useful tool in a renewable company’s tool belt, whether you’re 100% focused on renewables or whether you have some old and some new energy.
“Having a number of different tools available to adapt as your risk management need changes, and as the insurance market is changing, is very important,” Olsson added.
“Those tools should ideally be a combination of perhaps a mutual solution, a captive solution, and a commercial market solution. So, you can take advantage of these three tools as your needs change and as the market environment changes.”