Geoff Rubel, a veteran in the energy insurance sector with over two decades of experience and the national resource practice – underwriting specialist at Sovereign Insurance, discusses the evolving landscape of renewable energy insurance.
The renewable energy insurance sector is undergoing a phase of maturity, marked by the development of a robust ecosystem within the insurance supply chain, according to Geoff Rubel of Sovereign Insurance. With a significant global investment in creating a low carbon economy, insurance partners and reinsurance collaborators are increasingly dedicated to supporting renewable energy initiatives.
Rubel notes a shift in the insurance industry, with renewable energy sources such as wind and solar gaining recognition as distinct underwriting disciplines. Previously, these projects were grouped with conventional energy underwriters dealing with oil, gas, mining, and power. The industry is now experiencing increased collaboration and information sharing, essential for navigating the maturation phase successfully.
In Alberta, where a seven-month moratorium on large-scale renewable energy projects is set to end, this development is crucial. Rubel emphasizes that as more projects are initiated and data is collected, underwriting information will improve, providing better opportunities for a profitable industry while aligning with the low carbon transition goals.
Challenges in the Renewable Energy Insurance Sector
Despite the positive trajectory, Rubel acknowledges challenges facing the sector, particularly the surge in extreme weather activities. Wind and solar energy farms, dependent on direct access to natural resources, face the dilemma of exposure to adverse weather conditions. Factors like windstorms and hail pose threats to wind farms, while solar farms in hot, dry areas are susceptible to powerful convective storms and wildfires.
Rubel emphasizes the impact of wildfires in Alberta, leading to higher premiums due to catastrophic losses and extensive burned hectares. While Alberta is set to lift its ban on new renewable energy projects, the pause has affected 118 projects worth $33 billion, impacting the province’s investment reputation.
Capacity and Rates in the Renewable Energy Insurance Market
Rubel acknowledges challenges in gaining a complete picture of capacity and rates in the renewable energy insurance market, citing an ongoing evolution. Despite aggressive competition and unsustainable pricing from 2015 to 2021, recent costly loss events, primarily due to natural disasters, have prompted a rationalization period in the market.
While enthusiasm for low carbon energy solutions persists, the market is experiencing a more balanced competition. Rubel anticipates a potential restriction in capacity in certain regions, driven by rationalized pricing and the need for more manageable risk levels, especially in areas prone to hail or wildfires.