Achieving sustainable energy utilisation has become a global priority, necessitating the insurance industry's involvement in this green revolution. Offshore wind power has garnered significant attention and market projections indicate a robust growth trajectory over the next decade. Asia-Pacific countries such as China and Japan are expected to be the key drivers, while leading nations like the UK and Germany are also vigorously promoting offshore wind projects.
It is pleasing to witness the global community making progress towards a more sustainable future. However, as stakeholders, we cannot overlook the fact that offshore wind power has led to frequent and severe claims due to:
- Natural disasters
- Vessel collisions
- Transportation/installation accidents
- Subsea cable failures
- Environmental pollution
- Business interruption loss
These risks have resulted in substantial losses, compelling insurers to adopt a more cautious approach to underwriting offshore wind projects.
Moreover, offshore wind power is moving towards clustering and deep-sea deployment. Clustering aims to leverage economies of scale to achieve cost reduction and improve operational efficiency, however it leads to the concentration of risks. Deep-sea deployment involves greater distances from shore (exceeding 100 km) and more complex environmental risks.
Nevertheless, with risks come opportunities. As offshore wind power advances into deeper and bluer oceans, so too does the insurance industry. Unaddressed risks present opportunities for agile and responsive insurers.
Identifying how the insurance industry can better align with offshore wind is a complex issue. Here, we propose some perspectives based on the Chinese market.
- Leveraging big data and other technologies to develop specialised risk models and determine more accurate premium rates.
- Introducing international reinsurance capacity.
- Introducing marine surveyor mechanisms.
- Encouraging a virtuous cycle by offering incentives to operators who implement risk mitigation strategies.
- Establishing insurer collaboration platforms to seek policy support and facilitate the flow of information and data sharing.
- Investing in R&D to better understand the associated risks.