Both the severity and the frequency of these claims are rising in the American renewable energy market.
Renewable energy industry insurance claims are on the rise, both in terms of severity and frequency, said an insurer specializing in this market, GCube Insurance. The figures have seen a considerable increase over the last half decade, which means that asset owners and insurers alike will need to alter their risk benchmark.
The insurance company linked the change in claims frequency and with very specific causes.
According to GCube Insurance, the renewable energy industry insurance claims are increasing because of component vulnerability, changing original equipment manufacturer (O.E.M.) warranties and defective designs. The California based insurer also pointed out that extreme weather damage played an important role.
The insurance company also stated that at its recent Advisory Council meeting, risk managers and asset owners within this marketplace voiced concerns regarding the impact of cost pressures on sustainable insurance pricing as well as on integrity of assets.
The demand for rapid construction is also impacting renewable energy industry insurance claims.
One topic that especially held the spotlight was faster build times. Those have been linked with a raised material damage level during the construction process itself. Construction companies are facing rising pressures to complete projects with shorter deadlines and with improved efficiency.
As a result, they have been required to bring in personnel faster than experience levels can grow. Reduced experience levels across construction teams are handling complex equipment, learned attendees of the meeting. The outcome is a raised number of claims and an increase in severity in the claims made.
Equally, as components fail, it means that higher costs are associated with claims. As components become increasingly complex, they become more difficult to replace, particularly in areas of isolation where many of the construction sites are located. This only further drives up their cost. For instance, in the case of wind energy in which newer blades are being used, any amount of damage to a component
could require the replacement of the entire blade simply because of the isolated nature of wind farms. Replacing complete blades instead of individual components can rapidly raise maintenance and operation costs, said GCube.