Renewable energy projects and underinsurance

Why it’s important to review your renewable energy property and business interruption policies

The renewable energy industry and renewable energy projects, like many businesses, are experiencing the effects of the highest inflation rates in a generation.

Across the board, price surges are affecting the market value of assets, while supply shortages and delays are prolonging rebuild times and increasing the potential total cost of operational stoppages.

This makes it crucial for you to review your insured values and insurance policy wordings. This will help you determine whether your insurance and programs remain adequate and work out how much cover you need.

While the drivers and impacts of inflation can vary, several factors could be affecting your business and driving increases in asset valuation. These factors are also contributing to:

Supply chain disruptions

Commodity price increases

Labour costs and availability

Higher manufacturing costs

Rising finished goods costs

Exchange rate instability.

As the rebuild cost and costs to recover after a loss increase, insurers are requesting updated property values from their policyholders to adjust their catastrophe modelling. Some are also reviewing premiums to determine whether they remain adequate for current risks. Amid heightened underwriter scrutiny, you need to develop and maintain reliable asset values using consistent and sensible methods.

For renewable energy asset owners and investors – material damage & business interruption insurance should provide a crucial safety net. These help protect your property assets and business for loss of income against unforeseen events. In the current climate of increasing asset reinstatement values and wholesale energy prices soaring, underinsurance is one of the major risks that is facing the renewable energy industry.

Inflation rates and costs drive underinsurance concerns

Though the surge in inflation is slowing, inflation is still expected to impact property and business interruption values across all industries and geographies.1

The information contained herein is based on sources we believe reliable and should be understood to be general insurance and risk management information only. The information is not intended to be taken as advice and cannot be relied upon as such. Statements concerning legal, tax or accounting matters should be understood to be general observations based solely on our experience as insurance brokers and risk consultants and should not be relied upon as legal, tax or accounting advice, which we are not authorised to provide.

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