Power insurance rates have been falling for two years, and in some cases reductions are reaching approximately 40 percent, the latest annual Power Market Review from Willis found. The part that is harder to sell to a client is what comes next.

The soft market is here, but the gains are not distributed evenly. Willis, a WTW business, draws on its own placement data across global power markets to make the distinction clear. Conventional thermal and hydropower assets with established loss records, credible valuations, clear maintenance schedules, and well-engineered risk data are pulling the deepest rate cuts.

The pattern is corroborated by independent broker data. Gallagher Specialty's first-half 2026 energy insurance market update found overcapacity to be the defining theme across upstream, downstream, and power segments, with upstream blended rate reductions averaging 11 percent in 2025 and double-digit cuts expected to continue through 2026. Amwins reached a similar conclusion in its energy market report, finding the property side of the power market broadly softening due to abundant capacity and growing insurer competition.

Catastrophe-exposed assets, vulnerable supply chains, and risks with weak operational data still attract closer underwriting scrutiny. Renewables and conventional generation draw highly competitive insurer interest. Transmission and distribution risks face more selective terms, particularly in wildfire and bushfire locations.

Rates fall, but total premiums don't

Falling rates can disguise a more complicated premium picture. Electrification, new-build generation, delayed retirement of conventional assets, and higher replacement costs are all increasing insurable values. Total premium can hold steady even as rating levels decline.

Willis's review notes that power companies should review limits, deductibles, and coverage adequacy with the same urgency as pricing. The deeper problem, however, is equipment. Procurement times for major components, including transformers, turbines, and generators have nearly doubled since 2021, according to the review.

That finding is independently supported. The International Energy Agency's 2025 Building the Future Transmission Grid report, based on a 2024 industry survey, found large power transformer lead times have almost doubled on average since 2021. Wood Mackenzie's Q2 2025 survey, meanwhile, put average delivery times at 128 weeks for standard power transformers and 144 weeks for generator step-up units, with some orders extending to four years.

Those timelines have a direct consequence for insurance programs. Longer replacement periods mean longer recovery periods after losses. Indemnity periods in existing business interruption policies may no longer match what a real recovery would take, and a program renewed without revisiting BI assumptions against current supplier lead times can fall short when a claim occurs.

Geopolitical disruption has compounded the pressure. The Ukraine conflict shifted sourcing strategies and increased demand for replacement transformers and high-voltage components. Shipping route disruptions through the Strait of Hormuz and the Red Sea have pushed cargo onto longer and less predictable routes.

Willis's review notes that Chinese OEM manufacturers now occupy a central role in global power sector supply chains, and concentration in that supplier base creates geopolitical risk that most insurance programs do not yet price.

Nuclear closes a bankability gap

Willis's review also identifies a specific gap in nuclear insurance. The global nuclear sector has generated considerable policy momentum, particularly in the US, UK, and Poland. In the US, the Department of Energy's Reactor Pilot Program has seen four advanced reactor concepts achieve criticality in 2026.

A conditional $17.5 billion is available to support long-lead equipment procurement for AP1000 reactors, according to the review. But bankability has not matched that pace. Contracting, licensing, and financing continue to lag the scale of ambition.

Lenders want coverage for cost overruns. But the sector's complexity, long delivery horizons, and severity potential make broad cost-overrun transfer difficult for insurers and financial markets to price. Willis identifies this as an area where innovation, including performance guarantees and portfolio-based approaches, could help unlock capital for project delivery.

The same logic applies to power sector M&A more broadly. Willis's review finds that successful transactions now depend increasingly on whether companies can demonstrate asset stewardship and a credible risk and insurance strategy early in the deal process, rather than as a back-end placement exercise. Private equity is facing constrained exits and longer holding periods, which has made the ability to translate portfolio complexity into underwriting confidence a transaction differentiator.

Before the window closes

Willis's review predicts that competitive conditions are likely to persist into 2027, provided capacity stays intact and no major loss pattern emerges. Gallagher Specialty cautioned in its first-half 2026 update that only a series of major insured losses or a withdrawal of capacity could halt what it described as an inevitable downward trajectory in the rating cycle. The 2026 hurricane season has been quiet at time of publication, leaving overall market conditions unchanged.

The window for using soft conditions to reset program architecture is open, but it has an unknown closing date. The energy insurance soft market conditions heading into 2026 created buyer positioning that brokers had not seen in years. Willis's review argues the right response is not to bank the savings and move on, but to revisit limits, deductibles, coverage extensions, program architecture, and BI assumptions against current lead times.

The structural pressure underneath the soft market is running the other way. AI and data centre demand are driving power grid stress that is increasing the business interruption exposure of power assets in ways that static underwriting surveys have not yet fully captured. Rob Hale, global power and renewable energy leader at Willis Natural Resources, said the companies that benefit most from this cycle will be those that use today's conditions to build stronger, better-evidenced risk financing strategies.