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How insurance can accelerate the energy transition

Insurance can provide the financial safety net to drive change and help local, regional, and global stakeholders realise opportunities during the energy transition.

26/02/2025 · 4 minute read

Achieving a smooth global energy transition will require decisive and ambitious action from a wide range of stakeholders. This is particularly important for the energy and power industry, given its critical role in both energy security and the energy transition at global and national levels. It’s also important for the insurance sector. As innovation in renewable energy and electrification advances worldwide, the insurance sector is stepping up to embrace the unknown and the novel, positioning itself as a key enabler of progress.

Insurance can provide the financial safety net to drive change and help local, regional, and global stakeholders realise opportunities during the energy transition. This consensus emerged during a dynamic start to 2025, as our flagship energy and power events brought together a diverse range of experts from across the industry in Houston and Dubai, with CERAWeek just around the corner.

From policy developments to mobilising private finance, successfully navigating the possible pathways towards net-zero requires productive cooperation among all stakeholders. Working together to solve the energy trilemma of balancing affordability and access, energy security, and environmental sustainability is critical to ensuring that energy transition efforts can drive sustainable economic growth.

Here are six risks shaping the energy transition in 2025 that emerged at Marsh’s Energy Industry Conference. 

1. Geopolitical uncertainty 

Investments in energy systems are substantial, with returns often realised over decades. However, political and economic events can create credit or political exposures that may discourage investors from committing funds or impact expected returns after a commitment has been made. Additionally, political risks associated with tariffs can pose a challenge to supply chains, potentially affecting energy prices and the costs associated with the energy transition.

In today’s dynamic global political landscape, insurance can play a crucial role in providing certainty for investors. Political risk insurance is one way businesses can mitigate such risks and enhance financial certainty.

2. Technology and performance 

Another factor impacting companies’ ability to attract investment is the rapid pace of technological progress. Whether a company is building a battery storage facility or a concentrated solar power plant, the speed of innovation can make it challenging to determine which technologies to support, as advancements may outpace potential returns.

The insurance industry has been instrumental in supporting R&D in the energy industry. Today, our specialist teams are creating new insurance products to support the deployment of new and unproven energy technologies, including helping traditional energy companies leverage their legacy assets and capabilities for use in the future energy landscape, and developing new ways to facilitate capital flows to regions where mobilising investments for clean energy technology can be difficult.  

3. Managing talent 

Nurturing and retaining talent in this rapidly changing environment is a consistent challenge. Mercer’s own research considers how the energy transition is changing the sector’s workforce composition, with only 57% of energy executives saying they have got enough agility in their talent models today. Some sectors within the energy industry report difficulties in attracting talent in both technical roles and enabling functions, impeding their ability to evolve and adapt to change; other sectors experience highly competitive markets where talent is in high demand, making it tricky to retain top performers. To keep pace, businesses across the energy space must understand and address their risk exposure when it comes to talent. 

4. Climate change 

Climate impacts are already forcing companies to rethink their infrastructure needs and designs as well as develop new strategies and business models to protect their assets and balance sheets. In this context, the insurance industry has deep expertise in proactive risk management.

A clear example of this is the industry’s expertise in mapping and mitigating the risks to energy infrastructure from extreme weather-related events, the likelihood and severity of which continues to develop. Often infrastructure is not designed to withstand more frequent and intense weather extremes. Marsh McLennan’s Flood Risk Index, for example, shows that 23% of the world’s power generation capacity is currently threatened by flooding. 

Increasing the resilience of energy infrastructure to safeguard against climate events is now a necessity. Marsh is helping companies by applying climate analytics to risk engineering at client sites as well as by assessing risk exposures in supplier networks — to help companies understand their climate risks, inform more resilient and adaptable infrastructure design, and thereby enhance climate resilience.

5. Regulations

Recognising the potential of energy innovation to both address greenhouse gas emissions and strengthen energy security, governments globally have allocated almost US$2 trillion in direct investment support, along with policy and regulatory measures to incentivise the deployment of lower-carbon sources of energy. Regulatory frameworks are especially important for technologies such as carbon capture and storage, in order to create clarity for investors.  

As the energy sector undergoes its own transition, the insurance market will need to match this pace of development. The insurance industry is increasingly involved in regulatory discussions and collaborating with policymakers to bridge technical knowledge gaps. For instance, if a government mandates that companies capture carbon from new energy projects, insurance solutions can address the new ecosystem of risks, thereby supporting the actions needed to comply with regulatory requirements and thrive in the evolving landscape.

6. Supply chain disruptions

With record investment in low-carbon solutions, companies delivering these projects face risks throughout their supply chains. According to Oliver Wyman, some 60% of CEOs say they plan to reduce their supply chain exposure to higher-risk regions in the next year or two, primarily to address geopolitical uncertainty, tariffs, and industrial policies. By mapping and analysing these risks, businesses can gain insights that help them address uncertainties that might otherwise have serious consequences.

The importance of rewiring supply chains for greater resilience will be a key theme at CERAWeek in Houston, and we look forward to exploring how the insurance industry can help the energy industry and others overcome these challenges.

When innovation meets collaboration

One thing is clear as we find ways to manage and mitigate these complex, interrelated risks: partnerships and collaboration are crucial. Across borders, industries, sectors, and communities, our shared insights will help businesses, governments, and people navigate the challenges and opportunities of the energy transition. Already, 2025 has demonstrated the extraordinary momentum within the energy and power industry — we felt that from over a thousand people from over 50 countries who have attended our energy industry events. 

We are committed to harnessing this collaborative spirit to foster greater creativity and enhanced strategies for the energy transition. The insurance industry plays a vital role as an enabling force, innovating and accelerating the solutions that will help our energy industry and all of our clients succeed.  

How insurance enables projects

From the rise of mega offshore projects in the 1980s to the development of industrial cities across the globe, insurance plays a vital role in enabling projects to secure financing, lending, and commercialisation that might otherwise not succeed. For instance, the Hibernia project in Newfoundland transformed the province's economy, while the Brent Field Gravity Base Structures, built in the 1970s, were designed to withstand winds of 200 miles per hour and waves up to 25 meters high. More than four decades later, they continue to fulfil that purpose. More recently, insurance has been an essential enabler in developing refining and petrochemical cities such as Jubail or Yanbu. 

Our people

Andrew George

Andrew George

Global Head of Energy & Power

Amy Barnes

Amy Barnes

Head of Climate & Sustainability Strategy

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