Aon brings ‘first-of-its-kind risk transfer solution’ to market
Aon brings ‘first-of-its-kind risk transfer solution’ to market | Insurance Business Canada
Environmental
Aon brings ‘first-of-its-kind risk transfer solution’ to market
New insurance product designed for carbon capture and storage projects
Environmental
By
Terry Gangcuangco
Aon has unveiled a new insurance product tailored for international companies involved in carbon dioxide transportation and storage.
Designed to cover the significant risks linked to carbon capture and storage (CCS) projects, Aon’s new offering aims to enhance the insurability of such ventures, bridging a crucial protection gap and paving the way for easier access to funding from capital providers and investors.
The product also champions environmental, social, and governance principles by supporting industries aiming to achieve their net zero emissions targets through reduced carbon footprints.
Developed in Aon’s capacity as the insurance broker for energy firm Eni UK, the product supports large-scale, commercial CCS initiatives such as the HyNet North West and the Northern Endurance Partnership. Although initially created for a UK-based project, the insurance product is applicable worldwide, catering to global standards and expectations.
Aon’s CCS insurance solution offers comprehensive coverage for physical damage, loss of revenue, and general liabilities suitable for large-scale operations. It also includes customised insurance solutions that address potential issues with storage reservoir integrity and related revenue losses.
Additionally, the product provides compensation for lost tax credits or necessary carbon credit purchases due to carbon dioxide leaks from storage facilities. All insurance placements are secured with highly rated insurers, predominantly within the London Market.
William Lynch, business leader for natural resources at Aon, commented: “Carbon capture is a fundamental component in reducing emissions and supporting the energy transition. While challenges remain, this is a first-of-its-kind risk transfer solution, aimed at providing comprehensive cover under an agreed policy wording, for transport and storage companies engaged in CCS.
“Cover spans the construction and repurposing of existing assets as well as the operational phase. A huge benefit for operators and their investors, as well as their customers, is knowing what their insurance costs and coverage will be in an otherwise uncertain market.
“Aon has spearheaded the development of this product over the last 18 months, working in collaboration with leading underwriters and the legal community, and we look forward to working on many similar projects.”
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