Australia insurers tighten renewable energy cover: Willis

Natural catastrophe exposure continues to shape underwriting across renewable projects.

Australia's renewable energy insurance market remains supportive but is becoming more selective as project risks increase, despite continued growth in the country's renewable energy sector.

According to Willis’ Renewable Energy Market Review, it said insurers continue to offer capacity for well-structured renewable energy projects, but more complex developments are facing higher premiums and tighter policy terms as grid constraints, planning delays, rising costs and climate-related risks become more significant.

Natural catastrophe risks, including hail, wind, bushfires and flooding, remain key factors affecting underwriting decisions and pricing. 

Insurers are also closely assessing risks related to equipment failure and design defects.

John Rae, Renewable Energy Leader for the Pacific at Willis, said transmission infrastructure constraints, supply chain challenges and the integration of variable renewable energy sources are becoming more prominent. 

He added that claims inflation and higher reinsurance costs continue to support premium levels across the sector.

Rae said achieving favourable insurance outcomes increasingly depends on strong risk presentation, sound technical design and well-structured insurance programmes. 

Whilst insurance capacity remains available, underwriting and pricing decisions are increasingly influenced by project location, technology and overall risk quality.

The report said Australia's renewable energy sector continued to expand in 2025, with renewable sources accounting for about 36% of the country's total electricity generation. 

In the National Electricity Market, renewable energy's share reached around 40% in early 2025 before exceeding 50% of electricity generation over a full quarter for the first time later in the year, driven by rooftop solar, stronger wind generation and growing battery storage.