Willis: Power industry underestimating property values by 30%

by Richard Kilner

Story link: Willis: Power industry underestimating property values by 30%

The first Utility Market Update, produced by Willis’ Global Markets International team, has reached a number of key findings.

The report has considered the implications and impact facing the global power industry given the recent market conditions.

Perhaps most importantly, the update reveals that power companies seeking to make a claim could suffer serious damage as a result of under-insurance.

The damage could be particularly heavy given the recent rapid rises in demand and costs of labour, equipment and commodities.

Graham Knight, Utilities Practice Group leader, has stated his belief that many clients are unintentionally underestimating the value of their property, by as much as 30%.

This undervaluing creates difficulties for underwriters, who base their premiums on the values declared, and may not be sufficient to cover the eventual cost of a claim.

The update reaches the conclusion that the traditional method of increasing power production is no longer viable given the high and still rising costs of commodities, finite natural resources and the increasingly important environmental impact.

Knight has expressed the view that the future will involve utilising superior, cleaner, technology coupled with renewable sources of power production.