Skip to main content
Article

The renewable energy insurance markets in 2023 - key drivers and challenges

WTW Renewable Energy Market Review 2023

By Steven Munday | January 19, 2023

In this article from the 2023 Renewable Energy Market Review, we capture some of the key drivers and challenges anticipated within the renewable energy market.
Medioambiental
Climate Risk and Resilience

Introduction: a 12-month recap

In previous editions of the Renewable Energy Market Review we have reported on current market dynamics and successfully predicated the overall direction of travel. In this article the aim is to capture some of the key drivers and challenges anticipated within the burgeoning Renewable Energy market, both in London and on an international level.

We have previously reported that the Renewable Energy insurance market was – and continues to be – a complex, fragmented, dynamic, evolving global market still accommodated within many different product lines, making it opaque and difficult to directly analyse. It’s certainly complex, traversing the fortunes and prevailing appetites in several product lines:

  • Renewable Energy Speciality markets, for project lifecycle and portfolio risks
  • Power and broader Downstream markets, for operational and portfolio risks
  • Construction, Marine and Liability markets
  • The Upstream market, more frequently for offshore wind and hydrogen technologies

As these markets expand to accommodate the low carbon opportunity, they have captured many new graduates who now have 2-3 years market experience; however, they only know the harder market conditions which still prevail today.

Where were we in late 2021/early 2022?

In our January 2022 Renewable Energy Market Review, we reported that as the pandemic became more controlled, insurers' Combined Ratios were indicating a return to more sustainable levels. The technical adjustment of 2018-2021 was producing the desired impact, and there was a clear sense that the head of steam which had driven the last three years of pricing acceleration was stating to run out.

Considerable pain had been endured by insurance buyers, and with the hardening of attitudes towards ESG and the reduction in thermal opportunities, there was unlikely to be any shortage of capacity interested in supporting clean and green technologies. With the market fuelled by a feel-good factor due to this rapidly growing and now profitable sector, it was likely to experience a period of buoyant capacity (although still with limited technical engineering leads) which in turn would lead to signs of tentative competition beginning to show for some programmes.

It was felt that in some circumstances, the peak in rates was in sight – if buyers approached the market with their brokers in the right way, at the right time and with the right information:

  • If they respected and navigated the technical disciplines which had been formed over the previous three years, it was now possible to anticipate some level of rate reduction.
  • However, other buyers, that approached the technical engineering markets without a long-term relationship – on a more limited, transient, transactional basis – may not have received the same level of consideration by the market.
  • This left some unfortunate buyers with unattractive occupancies and geographies, poor loss ratios, standalone projects, or late submissions likely to receive comparatively negative, selective responses from a market enjoying the opportunity and benefits of the journey to harder trading conditions.

To read more, please download the full article, below.

Download full article

Disclaimer

WTW offers insurance-related services through its appropriately licensed and authorised companies in each country in which WTW operates. For further authorisation and regulatory details about our WTW legal entities, operating in your country, please refer to our WTW website. It is a regulatory requirement for us to consider our local licensing requirements.

Author

Global Renewable Energy Leader, Natural Resources at Willis Towers Watson

Contact

Alex Forand
U.S. Head of Power and Utility Broking, Natural Resources

Related content tags, list of links Article Environmental Natural Resources Climate Change
Contact Us