How has weather been affecting the industry?
Renewables projects across the U.S. have experienced significant, multi-million-dollar claims driven by weather events. Historically, flood, windstorm and earthquake were the main perils that were evaluated and drove pricing. Now, however, hail, tornado and wildfire rank as some of the major exposures that insurers and asset owners need to address. We’re addressing these risks with a combination of higher deductibles, sub-limits and/or increased premium.
For a long time, the mindset has revolved around what sort of pricing benefit will be achieved if an insured makes certain investments, like a racking system that stows in the event of high-speed winds, or panels built more robustly to withstand hail. As the cost of these types of claims increases, and if prudent investments have not been made to mitigate the risk, the questions will not simply be around pricing impact, but whether it makes sense for an insurer to deploy their capital against a particular risk or in a region. Again, this is a conversation that we need to have with our broker partners and insureds, and it’s key that we’re able to communicate openly about the issues we’re all facing.