Australia losses driving up renewable energy premiums
Renewable energy premiums are set to increase even more this year, pushed up by claim losses in Australia, according to a research paper jointly prepared by London-based broker BMS Group’s renewable energy team in Australia.
The paper, a partnership project with renewable energy specialist GCube Underwriting, says losses in Australia continue to dominate global claims activity.
“Throughout [last year], the renewable energy insurance market continued to harden with restrictive terms and conditions and increased premium rating being imposed across the board, driven by sustained claims activity in the sector,” the paper said.
Increases in premium rates throughout last year are anticipated to continue into this year, and the paper says insurers are seeking to differentiate clients, projects, warranty, natural catastrophe exposures and claims history.
Details of Australia claim activities between wind and solar projects show the former generated the higher percentage of monetary loss to insurers from 2016 to last year. The data was based on GCube’s client portfolio.
This is reflective of the per-unit cost of major components for wind projects including generators, gearboxes, blades and towers, as well as the higher revenue at risk for what are generally larger projects, the paper says.
“Whilst the claims data provided by GCube is not supported by premium and loss ratio data showing actual sector underwriting performance, it does provide a background to the adjusted underwriting process that insurers have implemented over the past 12 to 24 months,” it said.
“Insurers continue to focus on increased levels of underwriting information, notably contractor/sub-contractor experience and site location data/project design specification, to support their revised underwriting guidelines and to drive profitability back to a sector that has underperformed for a sustained period of time.”
Source: insurancenews
