Earth, Wind & Fire are making a comeback. Nat Cat events have dominated the news headlines in the last few weeks, with wildfires raging across America and Mexico suffering three powerful earthquakes in September alone.
This year’s Atlantic hurricane season has been particularly vicious, leading to over a hundred fatalities and billions of dollars of damage: RMS forecasts estimate the insured losses from destruction wrought by Harvey and Irma at a combined $75 billion. Contained within that figure, of course, is the cost of damage to a host of renewable energy assets.
With numerous turbine losses at wind farms caught up in the West Coast wildfires, and assets succumbing to strong winds and flooding from Texas to the Caribbean, it is very clear that, in addition to their terrible human consequences, Nat Cat events pose a severe, recurring threat to renewable energy project owners, in both established and emerging markets.
Recent losses also highlight longer term, underlying issues in the specialist insurance market, and raise questions about the ability of insurers to support the industry. In our last edition, I outlined the challenges posed by improper pricing of risk, and the looming possibility that a particularly severe Nat Cat season could further expose the soft market and lack of sector-specific expertise that had already led to several high-profile insurer exits.
Now it seems that the time has come for the market to face up to this challenge. Like many underwriters, GCube has seen its fair share of claims from recent disasters in North America and the Caribbean, and we are working closely with our insureds in affected regions, not only to make sure that claims are handled expediently – but also to provide advice and guidance based on our experience supporting renewables project owners when faced with the worst-case scenario.
In the wider insurance market, it remains to be seen what the impact will be on those who have offered under priced premiums. While the issue had likely been masked by the relative lull in major Nat Cat events since 2011, this year’s slew of disasters may well return it to the fore.
Despite this uncertainty, GCube remains confident in the strength and longevity of its specialist offering, and in recent months we have taken further steps to strengthen our underwriting team and management structure.
In July, GCube welcomed Steve Allen and Adam Hearn to our London office. Both joined us from RSA Group, where Steve served as a Director with a focus on power generations risks, and Adam was responsible for underwriting renewable energy assets across a string of emerging markets.
This experience will be invaluable as we go forwards, and I’d like to once again welcome them to GCube.
With GCube’s growth, comes restructuring. We recently decided to split our reporting lines in two, with Steve taking on overall responsibility for our US underwriting book, with our senior underwriting team of Sam Walsh, Monika Jahnke and Jeff Richards all reporting to him.
In today’s edition, we look back on the twelfth GCube Advisory Council, which took place in Nashville, Tennessee earlier this month, Steve shares his thoughts on the US market for the year ahead, and we highlight the main themes of our Offshore Wind Risk Seminar, alongside GCube’s contribution to discussion of the UK’s CfD auction results.
Enjoy the edition,
CEO, GCube Underwriting Ltd