Climate risk and insurance in the energy sector

What’s happening

• Climate disasters are becoming more prevalent, and insured loss from natural catastrophes are increasing.
• Insurers are re‑evaluating how they underwrite climate and natural catastrophe risk.
• Insurance rates are rising and parts of the world are becoming uninsurable.
• At the same time, energy demand is surging, requiring major infrastructure build‑out.
• As countries prioritize energy security, energy transition plans face growing risks, including politicization, greenwashing claims, and increasingly divergent regulatory frameworks.

Why

• Global warming is accelerating the frequency and severity of natural catastrophe events, putting pressure on insurance markets.
• The energy industry has long been a leading emitter and a driver of climate change, directly linking it to insurers' long‑term risk exposure.
• AI growth is accelerating electricity demand.
• Energy security is increasingly prioritized over energy transition as countries turn to higher‑emitting fossil fuels to meet rising demand.

Why it matters

• Growing market of energy projects, including renewables, where adequate insurance is fundamental to project success.
• Climate‑related “insurance retreat” can leave assets and projects stranded.
• Public policy increasingly exacerbates conflict in insurers' business models.
• Insurers face increasing tension between their clients, including the energy industry, their natural catastrophe exposure, and public perception.

How we can help

• Advise on global regulatory and political risk affecting energy and insurance.
• Identify and manage climate‑related risk, including coverage gaps, exclusions, and insurability risks.
• Advise on insurance coverage for energy projects, including renewable projects, involving technological innovation.
• Support commitments to underwrite renewable energy projects and develop innovative, multi‑year insurance solutions that support long‑term energy transition and infrastructure investment.

What we do

Insurance Sector

Global cross‑practice team of more than 200 lawyers advising primary insurers, reinsurers, intermediaries, and other insurance industry stakeholders on a broad range of issues including:

• Identifying, managing, and mitigating climate litigation and reputational risks (including greenwashing and shareholder activism);
• Policy drafting, review, structure and placement — advising on energy transition plans and insurance coverage, including any coverage gaps/exclusions;
• Advising board and senior managers on supervisory requirements to properly identify, assess, and manage the firm's exposure to climate‑related risks;
• Coverage advice and claims notification, including related to greenwashing and climate change claims; and
• Dispute resolution.

Authored by Jamie Rogers and Sara Bradstock.