- The need for net zero energy security
- Unstable global macroeconomy
- Growing demand for renewable energy at a time of stifled supply of inputs
This will propel risk management and ESG to the position of key issues in the coming year, according to WTW. Renewable Energy Market Review 2023 report.
The report includes contributions from more than two dozen international experts and specialists, WTW said. It highlights the need to balance risk and opportunity in a changing political, economic and social environment.
“Macro events and trends such as inflation, cost increases, security, and supply chains are impacting the renewable energy industry, making the current business environment challenging for risk managers,” said Margaret-Ann Splawn, contributing author and executive director of the Climate Markets and Investments Association. “Several important steps will help them assess their own vulnerabilities in the transition to net zero emissions and protect themselves from current and future ESG and climate-related risks.”
Splawn advised risk managers to:
- Understand your own ESG and sustainability position
- Take a reactive risk response position
- Play a strategic role throughout the company.
- Work together with relevant stakeholders
Steven Munday, global lead for natural resource renewables at WTW, reviewed the renewable energy insurance market in the report. Munday forecast that overall insurance rate increases would be tempered by individual insurers’ appetite for specific types of customers and assets, WTW said.
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“Buyers who fall into the higher levels of an insurer’s risk appetite can expect low to mid-single-digit increases,” Munday said. “Transient customers could achieve similar rates if insurers new to renewables fight for market share, but more circumspect risk insurers are likely to offer them mid- to high-single-digit increases. Finally, customers with challenging occupancies, little claims experience, or poor strategy may well see double-digit rate increases. Working with a broker that understands the specific risk appetite of each insurer will be critical to moderating rate increases.”
Munday said that in all cases, the coverage of natural catastrophe risks would be much higher.
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