Why renewables remain a challenge for insurers

The market has a mixed record of delivering profits to insurers.

Insurance is the unlikely strategic warfront for renewable energy companies as they prepare to accommodate the next wave of tech innovations in this space.

Companies will likely need to repower their systems every few years to be ready to accommodate bigger wind turbines, solar and battery installations, whilst also working at developing new energy sources, according to a report by WTW.

This will be a challenge for insurance markets, which have found it difficult to accommodate newer and more complex technologies at pace, it said.

“The insurance market is fully aware of the trillions of investments, it's heavily investing itself in restructuring, retraining and recruiting underwriters and brokers for the short- and long-term futures – making them well-positioned as enablers of the global energy transition,” the report said.

The renewable energy market has a mixed record of delivering profits to insurers.

“The renewable energy market has a mixed record of delivering profit to insurers. The fast pace of innovation, unknowns of prototypical technologies and high frequency of past losses has challenged insurer appetite,” WTW said.

As a result, a disconnect has emerged between technology readiness and commercial insurability.

WTW suggested that renewable energy companies engage with their sector-specialist risk engineers to help demystify technologies to insurers.

Harnessing specialist engineering insights to give insurers more access to data will help the insurers make informed decisions about cover and pricing.

The sector can also explore balancing traditional cover with alternative solutions such as alternative risk transfer, and performance insurance, for example.