Eight years ago, GrECo Group launched its Energy, Power & Mining Group Practice (EPM). We caught up with Zviadi Vardosanidze – General Manager at GrECo Specialty, Pawel Kowalewski – Group Practice Leader for EPM, and Michal Olszewski – General Manager GrECo Poland to discuss the current situation in the EPM market and the practice’s success.
The History Behind GrECo’s EPM Group Practice
What was the reason for creating the EPM Group practice?
Vardosanidze: Our Group Practice Energy, Power, and Mining (EPM) was first launched in 2016 following thorough market research and evaluation. At the time, we realised the energy sector was, and still is, the most critical sector and growth driver of every economy, no matter its size.
Naturally, the sphere is exposed to a variety of specific risks and faces challenges like decarbonisation, geopolitical tensions, technological changes, and natural hazards caused by climate change. However, as a risk specialist adviser and broker, it is our fundamental aim to help companies in the energy sector to overcome these challenges and transform their business. To solve these problems, we must understand our clients’ businesses and analyse and anticipate the ever-changing risk landscape to be able to offer solutions. It is logical that we must specialise if we want to help our clients with avoidance, minimisation, mitigation, and transfer of risks.
The Current State of Play in the Energy Market
How volatile is the EPM market currently, and where can risk services add value for clients?
Kowalewski: We define EPM broadly and refer to the entire sector’s value chain. Energy stands for hydrocarbons, Power for electricity, and Mining for the extractive industries other than oil and gas production.
Power including renewable energy sources is the most relevant sector in our regions, and the one with very high volatility. The energy markets have consolidated since the pandemic and the war in Ukraine, but the stabilisation might be short-lived. Electric energy is gaining importance not only in our daily lives but also in terms of industrial output. Global electricity demand is projected to rise by 5,900-7,000 TWh by 2030. To put this into perspective, this additional demand equates to the current electricity demand of the USA and the EU combined. The main contributors to increased demand are industrial production and transportation. Other factors are climate change (there’s a high demand for cooling) and population growth in emerging economies. It is expected that renewable energy will account for 50% of electricity production worldwide. The transformation process creates a lot of new risks and challenges; geopolitical tensions will also further contribute to the volatility of the energy markets.
What is the outlook for the EPM practice on the international insurance market?
Vardosanidze: Insurers have posted excellent underwriting results in the last two years, and we might be seeing the first signs of softening. However, a few good years will not offset two decades of underwriting losses suffered by the global insurance marketplace, especially in the energy sector. We expect insurance pricing to remain high for the foreseeable future as the insurers face increased risks from climate change, technology, supply chain and geopolitics. This keeps us focused on delivering insurance solutions and price levels which are consistent with the value, i.e., maintaining the cost of risk transfer at an economically sustainable level. This can only be achieved by improving the ability of our clients to retain risk and reduce the volatility of their operational output, i.e., fewer, and shorter disruptions.
“This is probably as fascinating and demanding a career in the insurance industry as you can get”
What are the most common challenges in EPM insurance?
Kowalewski: The most ubiquitous challenge in our industry is shortage of talent. What GrECo can offer to aspiring talent is the promise of very interesting and challenging projects that will most likely involve working with the biggest industrial clients, and with the entire domestic and international insurance markets that write EPM risks. This is probably as fascinating and demanding a career in the insurance industry as you can get.
Another common challenge is the complexity of the industry. Our clients are often multi-billion industrial conglomerates with complex processes and very high asset values at risk. To provide the client with bespoke risk management solutions the broker and advisor need to have a very good understanding of the current market, industry, and the particulars of their client’s business.
A Snapshot: GrECo Poland’s Success Story
Please can you tell us a bit about your background? How did you become EPM practice leader for GrECo Poland?
Olszewski: Before GrECo I worked for UNIQA Poland as a Head of Corporate Underwriting, I had many opportunities to cooperate with GrECo Poland, who always demonstrated a very high level of knowledge and experience. When I received an offer to join GrECo Poland as an EPM practice leader responsible for supporting the biggest projects in the power sector in Poland, I was certain it was the right choice for me.
Can you share with us couple of success stories in the Poland EPM practice?
Olszewski: GrECo Poland is currently responsible for the construction of an offshore wind farm (Baltica 2), with a total capex of approx. 6 billion EUR – one of the biggest projects in the world! We also worked on the construction of a state-of-the-art gas-fired power plant with approximately 900 MW of installed capacity and 1 billion EUR of project value. We are responsible for the operational cover for over 26 GW of installed capacity in Poland, this is around 35% of the country’s total power generation capacity.
How has adding EPM to your portfolio benefitted GrECo Poland?
Olszewski: Thanks to our EPM practice, GrECo Poland is recognized on the market as a specialty broker capable of placing very complex and challenging industrial risks into domestic and international markets.
Zviadi Vardosanidze
General Manager GrECo Specialty
T +43 664 962 39 04
Pawel Kowalewski
Group Practice Leader Energy, Power and Mining
T +48 507 085 066
Michał Olszewski
General Manager
GrECo Poland
T+ 48 723 979 990
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