President Director of Tugu Insurance Adi Pramana has said the\ninsurance industry is facing a changing risk profile in the energy\nsector amid rising oil prices triggered by the conflict in the Middle\nEast.<\/p>\n
\u201cWhen oil prices rise, producers will try to maximise production.\nUpstream activity becomes higher, so the operational risks that\ninsurance companies must manage also increase,\u201d Adi said at an Energy\nInsurance Literacy event in Jakarta on Thursday.<\/p>\n
Adi said one of the biggest challenges stems from geopolitical\nuncertainty, including the potential for disruption in the Strait of\nHormuz, which serves as a distribution route for around 20 percent of\nthe world\u2019s energy supply.<\/p>\n
According to him, if disruption occurs along that route, global oil\nsupply will be affected and trigger a rise in energy prices. Such\nconditions encourage oil and gas companies to increase production to\ntake advantage of high oil prices.<\/p>\n
Besides geopolitical factors, climate change is also becoming a new\nchallenge for the energy insurance industry. According to Adi, shifting\nweather patterns mean companies can no longer fully rely on historical\ndata when estimating potential future losses.<\/p>\n
He said that in the insurance business, companies must balance the\nvalue of insured assets against estimated claim payment liabilities, or\npredicted liability. However, climate change is making risk patterns\nincreasingly difficult to predict.<\/p>\n
\u201cIn the past, the rainy season and dry season could be relatively\nwell predicted; now the patterns are shifting. This means risk\ncalculation models must also change,\u201d he said.<\/p>\n
He added that the rise in average temperatures from year to year\nincreases the potential for disasters such as forest and land fires,\nextreme weather, and disruption to energy infrastructure. These\nconditions could increase both the frequency and the value of losses\nthat insurance companies must bear.<\/p>\n
He explained that the increase in risk is particularly pronounced in\nthe upstream oil and gas sector, which includes exploration and drilling\nactivities. Compared with the downstream sector, upstream risks are\nconsidered far greater because a single incident can trigger cascading\ndamage and require a long recovery period.<\/p>\n
He assessed that the ability of insurance companies to manage risk\nwill be an important factor in maintaining the investment climate in the\nenergy sector while strengthening national energy security amid\nincreasingly dynamic geopolitical challenges and climate change.<\/p>\n
\u201cOur role is not only to pay claims when losses occur, but to help\ncompanies identify and mitigate risks from the outset so that operations\nremain safe and sustainable,\u201d he said.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/insurance-industry-faces-shifting-risk-profiles-due-to-middle-east-conflict-1786024518", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }