On March 1, 2021 Leading specialist CPRI broker BPL Global published its annual Market Insight report revealing a snapshot of claims, emerging areas of demand and appetite and how the industry has fared over the past twelve months.
Given its 20% share of the brokered market, BPL Global delves into its own portfolio statistics in the report to evidence trends in the wider CPRI industry. This year’s report focuses in particular on the Project Finance (PF) and Infrastructure space, where enquiry levels have remained stable and comparable to 2019, reflecting the long-term nature of PF business.
The power sector represented the largest proportion (at a third) of all PF enquiries that BPL Global received in 2020, up from 28% in the previous year. Of these enquiries, two-thirds related to renewable energy deals, with particularly noteworthy demand for coverage for onshore and offshore wind farm projects in Vietnam and Taiwan. In the OECD, the CPRI market has seen strong PF demand for onshore and offshore wind in northern and western Europe, and for solar projects in Australia, the US, Chile and parts of southern Europe.
This year’s report also analyses CPRI demand trends in Africa, which continues to attract interest from clients and insurers alike, and represents BPL Global’s largest regional exposure. In addition, it highlights an increased number of enquiries for lenders’ Political Risk Insurance (PRI) from European investment funds and Independent Power Producers for African solar projects, which have attracted strong interest from CPRI underwriters.
Commenting on the findings, James Esdaile, Managing Director, BPL Global, said: “New patterns of demand have developed in recent years in the project finance arena, particularly for renewable energy projects for which we have witnessed increased interest, as reflected in this year’s report. We attribute this to banks allocating more liquidity to renewables projects, and we expect this trend to continue.”
He added: “Though there have been, of course, winners and losers in our market from the COVID-19 pandemic, and while we still await the full claims impact, we can report relative stability overall. Indeed, across an insurance industry already hardening pre-COVID, the pandemic has merely accelerated that market trend.”
“And as a result of this and rising geopolitical instability, we are also registering growing interest in political violence insurance (PV), which looks to plug exclusions in general property insurance policies and cover politically-instigated property damage and consequent business interruption for corporates.”
The report also updates on the current claims landscape, and includes the very latest market-wide CPRI claims statistics for banks and financial institutions which were published this week. In the period between 2007 and 2020, the CPRI market as a whole settled US$3.7 billion of claims to banks and financial institutions, with BPL Global handling a quarter of these claims. 100% of claims made by such entities in 2018, 2019 and 2020 were paid in full, and across the whole period only 3% were compromised claims.
Finally, the report unveils the results of the broker’s annual market-wide capacity survey. The headline figures reveal resilience in the market in 2020, with the aggregate capacity of the CPRI insurers remaining stable compared to the previous two years. Maximum capacity for some lines has, in fact, marginally increased, such as political risk insurance (PRI) and non-payment private obligor risk (CR), with similar levels of capacity for the latter still available for tenors of seven and 10 years as per last year’s survey.