News & Insights

Energy asset sell-offs raise regulatory and insurance challenges

Published 27 October 2021

As energy companies reposition themselves in the shift towards alternative sources many are selling off non-core assets – with both buyers and seller attracting scrutiny from regulators, warns Gallagher Head of Energy Ryan Mansom. 

In the latest Gallagher Business Insurance Review and Market Update H2 2021 report Mansom discusses how many of these assets are at different stages of life and need to be addressed accordingly, with focus on how the purchaser will meet the commitments of future decommissioning costs. 

The decommissioning process, which involves the safe removal of equipment and infrastructure, and environmental restoration, demands careful planning.

“There’s an enormous amount of federal regulation and legislation to comply with,” Mansom says. “The purchasing companies come under significant pressure from political/regulatory groups because they’re not only taking on the asset but also the decommissioning responsibility.”|

Gallagher works closely with purchasers to navigate the complexities of purchasing energy assets, ensuring our clients are best placed for both planned and unplanned events that could force the decommissioning of a field and that acquired assets fit the existing risk profile.

We also help clients file for the appropriate regulatory licences to undertake future decommissioning activities.  

Mansom says that regulators understandably subject smaller companies to close scrutiny of their risk mitigation strategies designed to prevent or respond to an incident. 

“We help clients understand and comply with the regulations, as well as put the required and appropriate insurances in place.

“Each field presents a different risk profile. Understanding these risks ‒ be it first party, third party or financial assurance ‒ enables us to future-proof our clients so they are protected from loss of their asset(s), damage or pollution to third parties and continuation of a revenue stream.”

Entering the solar, wind, hydrogen or battery storage arena is another rigorous undertaking for any company, involving numerous regulatory and contractual obligations, the support of an experienced insurance broker in adapting cover to the resultant changes in risk profile. 

To meet these challenges we look for ways to transfer the risks from our clients’ financial balance sheets while ensuring satisfaction from a regulatory perspective. Our global relationships provide our energy clients with the solutions they need, and the knowledge and experience is essential to securing the right outcomes for our clients.  

Read the full article

Access the full article ‘D&O challenges for overseas businesses listing on the ASX’ by downloading the full report, Business Insurance and Risk Market Update H2 21

In the report our experts provide market insights and offer guidance on

•    Placement and market update – how telling your business’s story helps sell your risk
•    Claims – insurers are experiencing testing times and this may be reflected in claims service
•    Directors and officers’ liability – D&O challenges facing overseas businesses listing on the ASX
•    Energy sector – analysis of the insurance and regulatory issues surrounding energy asset sell-offs
•    Renewals and reviews – why businesses need to take a lateral approach to insurance options
•    Workplace risk – workplace resilience is at a tipping point: what this means for employers.

Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective.
Gallagher Global Energy Insurance Market Update: Aug 21
Energy | Report

Gallagher Global Energy Insurance Market Update: Aug 21

23 August 2021
Gallagher Australia acquires Sound Insurance Services
Gallagher News

Gallagher Australia acquires Sound Insurance Services

02 December 2021
Prepare and protect your business against extreme weather and natural disasters
Fire, Flood & Storms | Article

Prepare and protect your business against extreme weather and natural disasters

30 November 2021