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Hardening Renewables Insurance Market Could Shift to No Downtime Coverage: Firetrace

December 09, 2022. By News Bureau

Increased hardening of the renewable energy insurance market could prompt a shift towards insurers covering asset damage but not lost revenue as a result of business interruption (BI) due to asset downtime.

This is as the industry looks to rebalance underestimated renewable energy risk portfolios.

According to Firetrace International (Firetrace), a leading provider of fire suppression technology to the global wind and solar industry, this means owner operators could soon be liable for lost revenue costs as a result of downtime after a fire event.

Insurance premiums for renewables projects, which had already been rising throughout 2021, are predicted to be up by 15% by the end of this year. Despite these increases, insurers have still been under-pricing renewable products and have to raise premiums or reduce coverage as a result, subjecting owner operators to more risk.

This is at a time when owner operators are already facing large deductibles, particularly in solar, chiefly as a result of unprecedented natural catastrophe (Nat Cat) claims.

Price hikes are also a result of protracted supply chain delays as they continue to put pressure on the insurance market, having a large impact on renewable BI claims.

GCube, the leading underwriter for renewable energy projects, reported a 10% increase in downtime from 2019 levels, which contributed to a 38% increase in BI claims since 2016 in its Market Report earlier this year.

“Every insurer is realising that their risk portfolio across solar, wind and battery has been underestimated and that puts us in an unprecedented period of premium cost escalation,” says Ross Paznokas, Global Business Development Manager – Clean Energy, Firetrace. “While we cannot control Nat Cat or supply chain challenges, we can reduce other catastrophic loss risks. Preventing catastrophic loss of an asset, and associated loss of revenue, as a result of fire, is a simple and affordable step– in fact suppression technology can be retrofitted into assets within a month and costs far less to install across an entire fleet than the increase in premiums after a fire claim.”

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