Perhaps upstream energy insurers and brokers alike should sit up and take some notice of some of the views expressed by our Norwegian clients at a recent seminar that we conducted in Stavanger, Norway.
On what basis do energy insurance buyers select their broker? Market orthodoxy suggests that it is all a matter of the price of the insurance product, and indeed the number of procurement department–driven requests for proposal (RFP) that Willis Energy receives each year certainly suggests that price is a very significant driver for a large number of clients.
The 50 upstream risk professionals from some of Norway’s leading energy companies who came to our inaugural Norwegian Upstream Energy Forum in Stavanger this week, however, had other ideas.
Cost is not King
We asked them this question:
When selecting your broker, is it the price of the product that is the overriding factor, or is it the quality of the service received?
Answering the question by means of an anonymous interactive voting system, no less than 80% of the clients insisted that the service and quality of the risk management consultancy on offer played a larger part in their selection process than the actual price of the product.
At the forum we discussed four key areas that are of significant concern to the Norwegian upstream energy industry:
- The condition of the global insurance market
- The marine liability arena
- The issue of kidnap and ransom (K&R) risk management, and;
- The nature of the revised Nordic Insurance Plan for offshore structures proposed for 2013.
Nordic Insurance Plan, K&R, and Other Burning Issues
The selection of service over price was not the only interesting response that emerged from this seminar:
- The clients gave strong backing to the proposed Nordic Insurance Plan for 2013, with 80% of them saying that it will lead to greater clarity of cover in the future.
- A full 40% of them didn’t think that their organization’s K&R risk reduction and risk mitigation strategies were being satisfactorily managed.
- And a small majority of them thought that the latest intervention of the Lloyd‘s Performance Management Directive in the upstream liability arena would lead to a long-term loss of market share for Lloyd’s insurers. (For our take on the Directive, read the August issue of the Willis Energy Market Review.)
All the clients who attended the Forum voted that the event has been a success, and we plan to stage similar events elsewhere in the world in the future.