According to Marsh data, natural catastrophes (NatCat) such as storm and hail damage make up 80% of claim values for solar photovoltaic (PV) projects globally. Meanwhile, for Battery Energy Storage Systems (BESS), global records show most failures happening in the first year of operations, and fires as a major cause of loss.
There’s no time like the present for renewable energy insurance
The increase in renewable energy projects in the region, coupled with more insurance offerings in the market, have led to the beginnings of a softening insurance landscape for renewable energy. For renewable energy project sponsors, this is a timely opportunity to revisit your insurance strategy and secure quicker, broader, and more cost-effective coverage.
However, businesses face challenges in securing quick and cost-effective insurance coverage for renewable energy projects as insurers are increasing scrutiny on:
- Markets susceptible to natural catastrophe risks.
- Projects using newer technologies due to the lack of historical loss data.
- Projects with complex or high-risk profiles requiring detailed technical documentation and risk mitigation plans.
How to shape your project’s risk profile and obtain better insurance terms:
1. Address natural catastrophe exposure directly
Natural catastrophes are the biggest driver for insurance appetite in Asia and due to this, insurers are strategically deploying capacity in risk-prone areas. Consequently, businesses can leverage physical climate risk modelling for actionable intelligence, as well as risk engineering design review to boost climate risk resilience for improved insurer confidence.
2. Review your insurance coverage
To ensure projects are financially sustainable and profitable, renewable energy developers and operators need to optimise total cost of risk (TCOR) through effective risk management and transfer strategies. A protection gap arises when insurance coverage fails to reflect the full value or risk profile. Ensure insurance programs align with current asset values with valuation and business interruption experts ahead of renewals to ensure projects remain sufficiently insured.
3. Engage trusted advisors to deliver a high-quality underwriting submission
Early involvement enables brokers and risk advisors to shape the project’s risk profile and advise on insurer expectations. Strong submissions are rewarded with better pricing and more flexible coverage. However, in situations where organisations require more detailed underwriting information, expert insurance facilities such as Marsh’s Asia Solar Advantage Program is essential to unlock capacity, competitive rates, and favourable terms.
How Marsh Asia supports renewable energy projects in Asia
Marsh Asia is an industry pioneer on renewable energy with proprietary insights and market access. Our integrated team of renewable energy engineers, technical brokers, and specialist advisors provides support for renewable energy projects at any stage — whether it's pre, during construction, or in operation. Marsh has supported over 3,000 renewable energy projects worldwide across more than 650 gigawatts including over 48 gigawatts in Asia.