Power and utilities companies continued to experience a general firming of the insurance marketplace into the third quarter of 2012.

According to the report:

• Property insurance rates generally increased in the second quarter of 2012, a trend that is likely to continue.
• Umbrella and excess casualty renewals are increasingly a challenge for many power and utilities clients as insurers’ focus on rates continues.
• Catastrophe (CAT) losses in 2012 have declined significantly compared to the record losses of 2011.
• Overall, power and utilities clients generally experienced directors and officers (D&O) liability insurance renewals with small increases for the primary layer and flat for excess layers.
• To date, D&O increases in the power and utility segments generally have been related to recently announced mergers and acquisitions (M&A).

The report also covers risk trends in the power and utilities sector, including:

• Climate change and the EPA: After the June 2011 U.S. Supreme Court decision in AEP v. Connecticut, underwriters of D&O liability insurance are keen to review climate change programs and related Securities and Exchange Commission (SEC) disclosures from power and utility companies. 
• Renewable Energy Portfolio Standards: D&O underwriters are interested in how power utilities are planning to comply with the requirements of 29 states and the District of Columbia to generate a minimum amount of power from renewable energy sources.
• Hydraulic Fracturing: Although the technique has fundamentally changed the natural gas market, there are numerous conflicting regulations as well as consumer concerns.
• Master Limited Partnership (MLP) Restructuring: Underwriters are concerned about potential conflicts of interest with parent companies, incentive distribution right schedules, and exposures from mergers and acquisitions.
• Regulatory Agency Investigations: The Federal Energy Regulatory Commission and the Commodities Futures Trading Commission have shown a renewed focus on market manipulation and are strengthening their oversight of the energy trading business.