Willis Towers Watson (WTW) estimates  theoretical insurance capacity limits for the international power market have contracted further to around $US3.25 billion ($4.32 billion) globally, with the “realistic level” closer to $US1.4 billion ($1.86 billion).

The market capacity figures, quoted in WTW’s Power Market Review for 2021, are obtained from individual insurers as part of an annual review conducted every year.

WTW says they are gathered from the insurance markets on the basis of securing their maximum theoretical capacity for any one risk.

WTW Head of Natural Resources Australasia Matthew Frost says overall insurance capacity in Australasia’s power sector is shrinking.

“While the rate of hardening has now decreased for most lines of business from last year’s percentage rises, the pressure to keep pushing for year-on-year increases shows little sign of abating,” he said.

Rating increases are now averaging between 15-20% for power market property programs, WTW says. This shows a slight easing of the hard market but "still far removed from any actual turnaround in rating levels”.

WTW says buyers still have plenty of capacity available to support their insurance programs. The highest program limits it has placed during the past 12 months have been around $US1 billion ($1.33 billion), with many programs featuring limits well below this figure.

Some lenders require higher limits up to and including the overall value of the plant, and WTW says that under these circumstances accessing sufficient capacity has “certainly become more challenging over the past two years”.