2019: A Tipping Point for Renewables Insurance?

In a number of ways, 2019 has felt like a tipping point.
It seems that – despite a lack of firm political commitment to net-zero at COP25 – the world has woken up to the severity of the climate crisis and the challenges it creates. That, in turn, has seen public backing for renewables grow, sustained corporate investment in clean power via PPAs and major insurers withdrawing support for generators of fossil fuels. 

Simultaneously – and as the risk profile of the expanding renewables sector continues to evolve – 2019 has also been a wake-up call for the insurance market.

 

Insurance is vital to the development and operation of renewables projects worldwide – and we are here to pay claims for our insureds when things go wrong. But our product is only viable if it also represents profitable business for our capacity providers. If we can’t keep those capacity providers on board by managing our own risks responsibly, ensuring robust terms, and pricing our premiums fairly and sustainably, the growth of renewable energy as an industry is threatened.

 

To make the size of this challenge perfectly clear, while GCube has recently had its capacity renewed for 2020 – the 26th year running – others have not. These businesses follow numerous others in exiting the renewables sector, narrowing the options available to asset owners.

 

Throughout 2019, GCube has been targeting a number of core areas as we seek to ensure that we continue delivering not only the most robust underwriting and claims offering in the market, but also added value beyond the insurance transaction, which we believe is critical to ongoing industry progress.

 

‘Resetting the benchmark’ has been a core theme that has run throughout each of our events this year – our Advisory Councils in March and Septemberour Broker Academy in July and September’s Offshore Wind Risk Seminar. These events were vital touchpoints with our insureds and brokers beyond our day-to-day interactions. They enabled us to touch on new emerging risks for renewables project owners, while talking frankly and openly about why market conditions call for rate increases and refinement of definitions.

 

In particular, 2019 has been a year to re-assess common ‘grey areas’ in Nat Cat claims and begin categorising what will be more common occurrences – not only over the next year, but within the next decade. While ‘Hard Cat’ claims, such as earthquakes, floods, and other traditional forms of Nat Cat are much easier to define and process, ‘Soft Cat’ as a result of extreme or unseasonal weather can be more common in the renewables industry – but could lead to vulnerability if not carefully managed.

 

Over the past 12 months, we have also invested heavily in our team. Following on from the opening of our new Amsterdam office, which broadens our European reach, along with substantial investment in our Loss Adjusting provision, we have most recently announced the appointment of a new SVP and Senior Underwriter – Brian Tyluki – to our New York office.

 

You can read more about Brian’s appointment in today’s edition, where we also look in depth at innovations in the claims process, and review some of the market insight commentary our team has provided in the media over the past year.

 

On behalf of the whole team at GCube, I wish you a wonderful festive season. We look forward to working with you all in 2020 and beyond.

 

All the best,

 

Fraser McLachlan

 

CEO, GCube.

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