MSIG Asia, RiskPoint bet on renewable energy insurance

The Asia-Pacific region could attract $3t of investments in power generation by 2033.

MSIG Asia Pte Ltd. and RiskPoint Group are banking on increased insurance demand from the Asia-Pacific region's booming renewable energy (RE) sector, where projects face risks from stronger typhoons, equipment failure, grid connection issues, and regulatory changes.

The region is experiencing a surge in RE projects particularly in solar, wind, hydro, and geothermal energy due to support from favourable government policies and foreign investments, Victorio Villar, executive vice president of underwriting and reinsurance and claims at MSIG Asia, told Insurance Asia.

/Victorio Villar, executive vice president of underwriting and reinsurance and claims at MSIG Asia.

“We want to support the green energy transition either by reducing our carbon footprint or offering insurance solutions to our clients in this area,” he said in a Zoom interview. “The potential in Asia-Pacific is much, much larger than in Europe.”

MSIG Asia, a unit of Japanese insurer Mitsui Sumitomo Insurance Co. Ltd., last month partnered with Danish insurer RiskPoint Group to advance RE insurance in the region.

The Monetary Authority of Singapore has approved RiskPoint's appointment as MSIG Singapore's managing general agent. The tie-up seeks to leverage the city-state’s position as a regional insurance hub to provide coverage for renewable energy projects across the broader Asia-Pacific region.

MSIG expects the region’s general insurance market to become a $3.6b (¥550b) industry in four years. The company seeks to boost earnings 15% annually from 2025 to 2029 after posting 7% yearly growth from 2015 to 2024, according to a report it posted on its website in January.

“We recognised that Singapore was becoming an international hub for insurance, so we made a strategic choice,” Brendan Reed, group head of global renewable energy at RiskPoint, told Insurance Asia in the same interview.

/Brendan Reed, group head of global renewable energy at RiskPoint

“We realised that in order to help Singapore with its ambitions and to help ourselves with ours, we needed to have a presence there,” he added.

MSIG and RiskPoint expect the Asia-Pacific region to attract $3t of investments in power generation by 2033.

“We have very high quality risk selection, supported by engineers and experienced claims professionals,” Reed said. “With MSIG’s expertise in local catastrophe exposures and regulations, we expect to deliver sustainable profits.”

Renewables will account for almost half of global electricity generation by 2030, with the share of wind and solar power doubling to 30%, representing investments of more than $2t, according to estimates by the International Energy Agency. 

Swiss Re estimates that if the world’s governments build all of the renewable output they are targeting, this will generate new insurance premiums of $237b by 2035.

But Villar said regulatory inconsistencies are a key challenge. Fuel subsidies in countries like Indonesia and Malaysia artificially lower the cost of fossil fuels, making RE projects less competitive and discouraging investment.

Another challenge is the uncertainty surrounding feed-in tariffs, which provide guaranteed pricing for renewable energy producers. 

“This creates potential income loss and lowers returns on investment for RE developers, reducing the sector’s attractiveness to financiers,” he said. “Additionally, uncertainty surrounding consistent market rules for these tariffs leads to further investor caution, slowing down project implementation as stakeholders navigate this evolving landscape.”

Reed also cited the risks associated with supply chains, as the expansion of renewable energy has introduced new contractors and manufacturers to the market. “Some of these new players may not have the same level of experience.”

As RE investments mature and insurers evolve, premiums would likely stabilise or even decrease, Villar said.

Reed drew parallels to the European RE market, where there had been increased competition in the past two decades. Initially, insurers were cautious about these technologies but as more companies entered the market, competition increased, leading to more favourable premiums and broader coverage.  

Like other insurance markets, RE coverage could be cyclical, fluctuating between hard and soft market conditions depending on the region, Reed said. “What I mean by that is, if you look at countries like Vietnam and their smaller wind and solar farms, the local market can likely handle that underwriting reasonably well,” he added.