Hardening renewable market may cause insurers to shift cover: partner on risk mitigation
Increased hardening of the renewable energy insurance market may cause a shift towards insurers covering asset damage, but not lost revenue, as a result of business interruption due to asset downtime, suggests provider of fire suppression technology, Firetrace International.
According to Firetrace, this means owner-operators could soon be liable for lost revenue costs as a result of downtime after a fire event.
The firm states that insurance premiums for renewables projects are predicted to be up by 15% by the end of 2022.
Though despite these increases, Firetrace notes that insurers have still been under-pricing renewable products and have to raise premiums or reduce coverage as a result, subjecting owner-operators to more risk.
This comes at a time when owner-operators are already facing large deductibles as a result of unprecedented natural catastrophe claims, adds the firm.
Price hikes are also a result of protracted supply chain delays as they continue to put pressure on the insurance market, having a large impact on renewable BI claims, says Firetrace.
The firm cites a GCube report from earlier this year which found a 10% increase in downtime from 2019 levels, contributing to a 38% increase in BI claims since 2016.
Ross Paznokas, Global Business Development Manager – Clean Energy, Firetrace, commented, “While we cannot control Nat Cat or supply chain challenges, we can reduce other catastrophic loss risks. Preventing catastrophic loss of an asset, and associated loss of revenue, as a result of fire, is a simple and affordable step– in fact suppression technology can be retrofitted into assets within a month and costs far less to install across an entire fleet than the increase in premiums after a fire claim.”
Firetrace suggests that it has already worked with businesses in manufacturing and machining, who have been dropped by insurance companies for not having sufficient risk-protection in place.
As a result, the firm has partnered with major US-based insurance broker, Consolidated Insurance and Risk Management, in this part of its business, creating the Precision Protection Program that unlocks a discount on insurance premiums if Firetrace technology is installed on site.
Ross continues, “We cannot rely on orignal equipment manufactorers to design out fire risk by including fire suppression technology at the manufacturing stage as they are battling with decreasing margins and financial losses, but it is in their interest to encourage retrofitting of this technology, especially those that are known to be more incendiary than others.
“However, insurers can move the needle and help reduce their own risks by mandating for risk-reduction technology. Municipalities can include requirements in planning and development stages to protect the local area from the risk of spreading fire“And, by investing a fraction of a renewables project budget, developers and owner operators can put in measures to decrease their premiums and reduce potential exposure to up to over a $1 million in lost revenue costs for every turbine experiencing downtime as a result of fire.”
Source: Reinsurance News, https://www.reinsurancene.ws/hardening-renewable-market-may-cause-insurers-to-shift-cover-firetrace/