Renewing renewables – an emerging risk challenge
The velocity of change for emerging risks poses major challenges for specialty insurers. For renewable energy, the underlying technologies are changing so fast that the fundamental elements of insurance cannot be taken for granted.
Insurance is at its core an old business; trust and the promise to pay lie at its heart. While digital transformation is in many ways changing the way underwriters underwrite, it is also the case that emerging technologies present some more fundamental challenges to the insurance business model.
This might seem big picture stuff, but it is particularly clear for emerging technology risks, such as renewable energy or cyber business, priorities for growth and the allocation of capacity for many specialty re/insurance carriers and managing agents in the London market and beyond.
The concept of indemnity, for example, is core to insurance – compensation in the event of a claim to return the insured to the situation they were in before the claim event took place. However, for fast-moving emerging technologies like renewables, the velocity of change means this is easier said than done.
In offshore energy, for instance, the technologies being used in wind farms are changing so rapidly that in the event of a claim, it would make little sense to substitute a piece of three-year-old engineering with a like-for-like replacement. The technology is moving too fast for that.
Even if you wanted to replace, like-for-like, a previous asset may already be obsolete and perhaps unavailable. Not only that, but the costs involved can change rapidly: emerging technologies usually get cheaper as they flourish; inflation raises costs in other ways.
Not only that, but fast-changing technologies mean fast-changing risks – usually with a lack of data to price them with the degree of confidence that underwriters in more traditional lines would take for granted. All of this means that decision-making for renewals, for exposure management, and for the claims process, represent major challenges.
Exact for renewables
Exact is an exposure management tool offered through AdvantageGo’s platform, offering re/insurance carriers enterprise-level exposure management. What’s changed is that, in response to demand from several clients, it has now been tailored for renewable energy business.
The velocity of change is one reason why exposure managers want to focus on this emerging risk class of business, particularly given upcoming renewals. Exact delivers a flexible and scalable solution to the demand for exposure scenarios and analytics, pre- and post-bind, for an individual risk or policy, all the way up to portfolio-level aggregate exposures.
Its flexibility and scope for further development has led several specialty market carriers to request something a bit more bespoke, supported by underlying data analysis for renewable energy risks in particular. AdGo’s developers were, of course, happy to oblige, and the result, developed in recent months, is “Exact for Renewables”.
The resulting application offers a dedicated ‘out of the box’ renewables data model, designed to enable the recording of onshore and offshore wind farms, solar farms, wave and tidal plants, substations or any other structure or property related to a renewables policy.
Clients can quickly and accurately populate their schedule data of insured items, through manual or automated lookups against industry databases. The first major application of these is already up and running, using data from Clarkson’s, a trade data and intelligence provider for marine and offshore energy, with which AdvantageGo has partnered.
Offshore wind has specific considerations, such as the wind farm’s developer, the distance from shore, and the motors and technology used within the turbines. Onshore wind and solar farms require similar granularity but some different data-sets for assets and technologies that are changing fast. Exact for Renewables is built to meet for this challenge.