Howden Re urgers reinsurers to support renewable energy sector

The re/insurance industry plays a pivotal role in supporting the global shift towards renewable energy, which is crucial for both the climate and the future of the global economy, says Howden Re, the reinsurance and risk advisory arm of Howden.

The firm also emphasises on the need for greater transparency and collaboration among all stakeholders to ensure risks are appropriately placed and managed.

As governments globally have increasingly incentivised renewable adoption for energy security and a cleaner power system, a new report from Howden Re projects that renewables will account for 74% of the growth in global primary energy consumption by 2030.

Howden Re’s new report, “Watt Now? Reinsuring the Renewable Energy Transition,” examines the growth of the renewable energy sector and its associated opportunities and risks from a reinsurance perspective.

James Metcalf, Associate Director Marine, Energy & Terror, at Howden Re, commented: “The renewable energy sector is evolving rapidly, bringing a unique set of challenges and opportunities. Collaboration across the industry is vital to support the sustainable growth and resilience of renewable energy projects worldwide.”

Costs for technologies like solar and wind are declining leading to a substantial shift towards cleaner energy sources which ensures growth opportunities for the re/insurance sector.

Moreover, the renewable energy insurance market is booming, with notable premium potential in solar, onshore wind, offshore wind, and battery energy storage systems (BESS).

Howden Re urges reinsurers to refine their view of risk, offering bespoke solutions tailored to each generation technology’s specific challenges, characteristics and construction needs.

Cedents are encouraged to thoroughly articulate their exposure, considering the variable risks tied to construction lead times, asset design and environmental factors.

For instance, severe convective storms (SCS) now account for 36% of global insured natural catastrophe losses, underscoring the importance of robust risk management strategies, explains Howden Re.

Simon Brooks, Managing Director, Marine, Energy & Terror, Howden Re, concluded: “The renewable energy sector is at a critical juncture. As we navigate the complexities of natural perils and evolving technologies, our focus remains on delivering innovative and tailored risk management solutions to support the sustainable growth of this vital industry.”

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