QBE launches new renewable energy insurance proposition
QBE Australia Pacific has launched insurance for renewable energy projects such as solar and wind farms within Australia, with the new proposition the first in market to offer ‘cradle to grave’ coverage across a project’s lifecycle from construction through to operation and decommissioning.
Eligible renewable projects include wind and solar energy generation, and battery storage, with plans for expansion to include emerging technologies such as hydrogen.
Elliot Hill, Managing Director, Business, QBE Australia Pacific, said the intermediated offering is an example of how QBE is supporting new and existing energy customers as the transition to lower carbon energy accelerates.
“QBE’s purpose is to enable a more resilient future, and we’re pleased to be contributing towards this by aligning our underwriting capabilities with the growing range of companies and energy systems that form part of a rapidly changing energy mix.”
In addition to covering the full journey – from construction to intermittent operation, to full operation, and eventual decommissioning – new policies can also support existing projects from any point in their lifecycle, such as for the upgrading of existing energy assets like transformer improvements.
Supporting the offering is an energy rating model developed by the new AUSPAC Renewable Energy team, which is being deployed across QBE offices internationally. The model not only provides accurate risk pricing but enables tailored coverage according to each project’s risk management profile, and flexibility if the risk profile changes.
“Renewable energy projects are often constructed in high-risk locations like flood plains due to their isolation,” said Mr. Hill.
“Our goal is to point project developers to the specific risk factors they have that lead to a higher premium price and equip them with knowledge on how to mitigate these risks. If developers then make changes to minimise their risk profile, we can re-price according to their new lowered risk profile, offering our customers the opportunity to reduce their premiums whilst also reducing their risks.”
The top five risks for brokers and renewable energy providers to consider include:
- Natural catastrophes: Solar projects are susceptible to hail, wind and flood, while wind farms can suffer from lightning strikes. To help mitigate this risk, site selection needs to be carefully considered, and appropriate construction materials that can withstand known risks should be used. For example, most top-tier solar panels designed to IEC61215 standard can withstand the impact of 25mm hail, however between 2000-2019, the Bureau of Meteorology recorded over 1200 events across Australia with hail stone sizes over 25mm.
- Technology advancement: While advancing technology may provide benefits to power generation, there is often no data on how these technologies perform over short, medium or long terms, meaning that risks or defects may not have yet been identified, and could pose a higher risk. It’s important to consider that the latest technologies may carry different risk profiles, and therefore different premium price impacts, compared to more established technologies.
- Supply chain delays: The increased investment in and demand for renewable projects continues to pose challenges on supply chains. This may affect replacement times for warranty claims or insurance losses. To mitigate this, developers may wish to negotiate replacement time in supply contracts to provide more certainty for their projects should issues arise.
- Contractor skills shortages: The labour market for various trades remains tight. If poor workmanship or damage has been identified on site, this will require shutdown of the operating assets, a complete audit, or a major rectification project, which will impact on operating profits. Engaging with an experienced contractor and ensuring adequate retention of project value until all issues are fixed may help reduce this risk.
- Inflation: Building and replacement costs have significantly increased in recent times, meaning that the sum insured for projects may not be high enough to fully repair or replace damaged buildings or parts. Developers should regularly review their sum insureds with their brokers to ensure that increased costs have been taken into account.
For more information, please contact your broker.
For more information:
Senior External Communications Specialist
+61 422 907 484