If project owners are not able to make contractors more accountable, their errors will continue to increase project owner premiums and terms will tighten. Lenders have been a main driver in placing all-risk under the project owner’s master policy, as a single party arguably simplifies the claims process. However, we are now at a stage where insurance terms are stretching the economic viability of some projects. At the same time, these primary policies now include exclusions that will result in claims being made on the OEM policy, thereby removing the claimed benefit of the owner controlled single primary policy.
Another major factor is weather. The rise in weather perils generally, but secondary perils more specifically, is reshaping the market. Backward-looking models have not yet caught up to the new reality of higher exposures, and the worsening of climate change-induced damage is expected to continue. It is important that these trends are recognised by developers and project financiers and that renewable energy projects are built to withstand not just the conditions that we’re currently facing, but the conditions for the complete lifecycle of the project.
As an established renewable energy insurer, we are a long-term supporter of the industry. With that support also comes a responsibility, we believe, to help the industry resolve its most fundamental challenges, including issues surrounding communication between project developers, assets owners, brokers and insurers. We will continue to share our experiences, expertise, best practice examples and insights acquired from our position as one of the largest underwriting teams specialising in renewable energy.