At RIMS, this underwriting head will urge insurers to back solar energy
At RIMS, this underwriting head will urge insurers to back solar energy | Insurance Business America
Risk Management News
At RIMS, this underwriting head will urge insurers to back solar energy
“It is cheaper to build a solar asset”
Risk Management News
By
Daniel Wood
The global risk community, including risk managers, insurance firms and brokers, will gather next month in San Diego for The Risk Management Society’s (RIMS) annual conference.
According to its website, the four-day event will involve 10,000 attendees and feature more than 300 speakers including Chubb Group CEO Evan G. Greenberg and leaders from Marsh, Aon and WTW.
One talking point is how to speed up the transition from dirty fossil fuels to clean energy.
Meet “the only renewable energy MGA”
Isaac McLean (pictured above) is chief underwriting officer with kWh Analytics. He described his US based firm as “the only renewable energy MGA writing property capacity today.”
Solar: more cost effective to operate than gas
Insurance Business asked if the context behind his RIMS talk is a big recent shift in the energy industry: fossil fuels no longer produce energy more efficiently than renewables?
“Absolutely,” he said. “Last year we hit the tipping point where it is cheaper to build a solar asset and generate electricity than it is just to continue to operate a gas plant.”
McLean said solar prices have come down quite dramatically, the output has gone up “and the technology is excellent.”
For example, he said, today’s pairing of solar with battery storage can now provide the more uniform power output that an electricity grid needs.
“It really is the future of energy,” said McLean.
Renewable energy stakeholders start to get it
He also said important stakeholders in the clean energy space are focusing more on resilience.
“Just this week, we were at a project finance conference where there were a bunch of bankers talking to solar asset owners about future development investments,” said McLean. “Obviously, the banks are interested because they make money on these projects because prices have come down but they’re also very interested in resiliency because losses interrupt that stream.”
He said this is a unique situation because the solar asset owners are “so motivated to make sure that their clients are operational and performing” which makes them very open to a conversation about resilience with their broker.
Are brokers fully on board yet?
However, some brokers aren’t quite on-board yet with this renewed focus on resilience.
“We were talking about a loss scenario and the broker spoke up and said, ‘That’s a BI [business interruption] only loss but that’s covered by insurance,’” said McLean. “The asset owner was chastising him and saying, ‘That’s not the point!’
McLean said this asset owner said he wanted this clean electricity project to operate and perform. One reason, he said, was because the company does well when it outperforms production estimates. The other reason: the asset owner gets his bonus!
“He doesn’t want a covered loss,” said McLean. “So they’re really engaged and interested in that resiliency.”
Asset owners of the round table
Another initiative having positive results, said McLean, is asset owner roundtables.
Other asset owners, he said, found that cleaning their inverters in spring was really beneficial because it reduces the risk of clogs in the filters of the inverters.
Pollen season was another risk factor discussed at the roundtable.
“You’ll see soiling on the panels and we want to make sure that we’re washing them following the pollen season and not right before which is when they have dust on them anyway,” said McLean.
The origins of kWh
IB suggested that kWh sounds like a firm of data experts who became an insurance company and asked if that is unusual in the solar energy insurance space?
“It is,” said McLean. “We started building a loss database and with that loss database we have a material chunk of the market and so that informs our nat cat and attritional loss modelling, so we have a more accurate view.”
It was then possible, he said, to segment these losses in terms of their causes and determine resiliency features that would improve the risk characteristics.
“Since we’re heavily into the data, we’re able to segment on what attributes are causing these losses, what resiliency features, whether it’s hardware selection, or how you’re operating that asset and that allows us to be more competitive or offer more limits to those parties.”
It also allows them to recommend changes, he said, to improve resiliency. At this stage, he said they primarily write insurance offerings for customers across the United States but also Canada.
McLean spoke to IB using his laptop’s battery and mobile phone hotspot. He was also sitting in the dark because an ongoing snowstorm had cut the power and dropped 25 cm of snow around his home in Denver, Colorado.
Are you an insurance broker in the clean energy space? How do you see the level of insurer engagement in this space? Please tell us below?
Related Stories
Keep up with the latest news and events
Join our mailing list, it’s free!
