Offshore Cable Claims Severity Increases by 25% in 2015
London, June 15th 2016 – Incidents relating to the installation and operation of high voltage subsea cables are the most costly cause of financial losses in the global offshore wind industry and led to insurance claims totalling more than €60 million in 2015.
That is according to data assembled by GCube Underwriting Ltd. (GCube), the leading underwriter for renewable energy, in a new report entitled Down to the Wire: An Insurance Buyer’s Guide to Subsea Cabling Incidents.
As the European offshore wind sector prepares to enter an extended phase of deep-water construction and new markets open up in North America and Asia, it is crucial that the industry starts to address a problematic bottleneck that can cause 100 days or more of unscheduled project delays and create substantial cost overruns.
On average, at least 10 subsea cable failures are declared to insurers each year in the offshore wind sector. While this frequency is low, the financial severity of these incidents upon developers, project owners and offshore transmission owners (OFTOs) continues to grow – such that they account for 77% of the total global cost of offshore wind farm losses.
Managing this financial impact will be essential if the industry is to meet increasingly stringent cost reduction targets and maintain its appeal to the international investment community.
In Down to the Wire, a report produced exclusively for GCube’s community of insured clients and brokers, GCube explores the causation, financial impact and mitigation of subsea cabling incidents. Crucially, the report finds that two-thirds of cable faults recorded in GCube’s extensive claims database can be attributed to contractor error during the installation phases, even if these do not manifest until the wind farms are operational.
This highlights a growing requirement, not only to ensure quality control during cable laying, but also to create more effective communications channels and improve data collection procedures.
“It’s striking just how often subsea cabling incidents in offshore wind can be traced back to human error,” said Jatin Sharma, Head of Business Development, GCube, and author of Down to the Wire.
“Cable installation techniques and monitoring technology are continuing to evolve as the industry looks to address this challenge – however recurring losses are still commonplace, and the number of ‘repeat offenders’ is a source of concern for the insurance industry.”
“Ultimately, when it comes to sharing lessons learnt, there’s no substitute for full transparency and consistent dialogue between project teams and the industry at large. A behavioural shift may be needed when it comes to the risk/reward balance developers agree in supply and installation contracts. In an industry aggressively driving down costs, there is clearly not enough margin for contractors to try and improve.”
Down to the Wire: An Insurance Buyer’s Guide to Subsea Cabling Incidents is the fifth claims report published by GCube, following Breaking Blades, Grinding Gearboxes, Transformers: Age of Breakdown and Towering Inferno. It aims to promote collaboration and best practices to minimise balance sheet losses, featuring technical expertise from HVPD, 6 Alpha Associates, Vattenfall, RES Offshore, CPNL, MWaves, TetraTech, BVG Associates and RELA.
The report is available exclusively to GCube’s insureds and brokers and will be officially launched at a broker reception in London on Thursday. For further information, please email email@example.com.