Compared with many other insurance lines, energy insurance
claims tend to be low frequency and high severity. When an
insured has suffered a loss, its loss record will often impact upon
the premium charged by underwriters upon renewal. This
practice is complicated by the fact that energy insurance claims
often take several months or sometimes years to resolve.
Therefore, at the time that a particular policy is renewed or
extended, it is not uncommon for there to be a lack of clarity
regarding the quantum of a particular loss, or perhaps even whether
the loss will ultimately be recoverable under the policy at
all.
In order to account for this, underwriters and an insured may
agree for a "loss load" to be applied at renewal.
Such a clause will typically provide for the agreed renewal premium
plus an additional premium which will apply in certain
circumstances e.g. if the indemnity for the notified loss exceeds x
amount, then y will be payable by way of additional
