Possible downsides
Although they provide options that can complement or replace traditional commercial insurance solutions, mutuals are unlikely to be the right fit for all renewable energy developers, investors, and owners. Integrating industry mutual and captive insurance solutions in risk finance strategies requires high engagement and risk management maturity that not all renewable energy professionals have invested in or achieved. To date, the power players in the renewable energy mutual space have pledged to expand their capabilities, but it is not clear whether this commitment can be sustained. It remains to be seen if mutuals will continue to evolve in parallel with the energy and power industry and, indeed, with their own individual memberships; each of which comprises representation of various sectors to different degrees and with different commitments to transition over time.
What the future may hold
The effect mutual insurance companies continues to have on the renewable energy insurance marketplace is tangible, and they remain well-positioned to challenge the offerings and business model of more traditional commercial insurers.
Mutuals are continually evaluating opportunities and working with brokers and members to address needs. Sharing many of the same customers, Marsh is working with mutuals to find solutions that lead the way. For instance, Marsh has established the Global Clean Energy Council to help clients navigate the coming changes, and the Energy & Power Mutual Center of Excellence to facilitate engagement with mutuals and align efforts to support our common clients. Most promising, is a Marsh feasibility study recently conducted for a new clean energy mutual that could provide capacity to global players in the energy transition. While still in early development, the feasibility study demonstrates a strong desire and preference toward mutuals as alternative risk finance option. Continued engagement between risk managers, brokers, and mutuals is the key to capitalising on the positive momentum going forward.
As the energy transition continues, renewable energy project owners, developers, and investors should consider how mutual insurance could bolster their risk management strategy.
