The growth of the renewable energy sector presents the insurance industry with a new set of problems as well as new potential business areas of focus.
Recently, Sam Walsh, the head of US renewable for AXIS Insurance, discussed the shifts that have taken place within the industry over the course of the past year in a conversation with IBA.
“2021 was a record-setting year for renewable energy capacity growth worldwide, and that was on top of a previous record year in 2020 – where even though it was a little bit of a blip from COVID, it proved to be a very resilient marketplace, and growth really continued to continue in an extensive way,” said Walsh. “That was on top of a previous record year in 2020 – where even though it was a little bit of a blip from COVID, it proved “And solar energy accounted for more than half of that gain over the course of the previous year.”
And according to Walsh, expansion in the field of renewable energy is just going to continue.
“The International Energy Association, often known as the IEA, forecasts that by the year 2026, the capacity of renewable energy sources around the world would likely be similar to the capacity of fossil fuels and nuclear power plants combined,” he stated. Therefore, a significant amount of healthy expansion can be anticipated in the not-too-distant future. However, when you have that kind of demand, there is also a genuine impact on the industry as a whole, in addition to the external difficulties that are currently confronting the global economy.
According to Walsh, insurance brokers who are interested in moving into the area should make it a priority to educate themselves on the ins and outs of renewable energy before moving forward.
“I think that communication is the key – and making sure that you are knowledgeable about the space, about the equipment that is being used – but also being able to feed back to insureds where the insurers are in terms of their appetite, their ability to write, and setting expectations,” he said. “I think that at the end of the day, communication is the key.” “I believe the most challenging situation is when you’re sort of getting down to the wire on a project and an insured needs very precise terms, but the insurer is not in a position where they are able to offer them. This presents the greatest challenge.
“That is never a position you want any party to be in, especially as you’re getting near to a financial close or breaking ground,” the attorney said. “That’s never a good sign.” And as a result, I believe that brokers are the real ones who are in control of being out in front of developers and owners and being able to influence the decisions that they are making, as well as then messaging back to insurers so that they can sell the project in the best way possible and make [insurers] more comfortable with it and more likely to write it. This is because brokers are the real ones who are in control of being out in front of developers and owners. Therefore, it’s clear that communication is essential.