Insuring Offshore Wind Farms. Fraser McLachlan

Transcription

1 Insuring Offshore Wind Farms Fraser McLachlan

2 Introduction Ten years involvement in insuring wind energy Responsible for WindPro insurance program In excess of 160 wind projects - worldwide Arranged insurance for: North Hoyle Nysted Quoting Q7 Barrow My personal View!

3 Agenda An update of the insurance markets position The insurance markets appetite for insuring offshore wind farms Underwriters approach to insuring wind energy risk

4 The Insurance Markets Position Marine Non-marine

5 Insurance Markets Current Position Price increases up to 350% Insurance Market back in profit just Lloyds of London forecasting 1.4 billion profit Not a bad place to invest?

6 Lloyds of London Capital Increase Capacity 10 5 Names (Unlimited) Conversion Capital Other Corporate Capital UK Non-listed UK Listed Trade Investors

7 Insurance Markets Current Position 12 months previously retrenched market 3 months to generate 30 million Now, 10 days to generate 200 million Pricing has stabilised Softer market means underwriters need to diversify

8 The Markets Appetite for Insuring Offshore Different market to onshore risk Onshore, property upstream Offshore, Oil/Gas downstream Oil and Gas is largely writing offshore wind An eduation process

9 The Markets Appetite for Insuring Offshore Different approach to Danish Insurers London market increasing capacity Is this the right place for the risk? We need terms that reflect the actual risk Risk Management will need to be rewarded

10 The Markets Appetite for Insuring Offshore Currently only a few brave players Two distinct market areas: Construction Operation Viewed as very different to Onshore Wind Onshore - rated on Asset Value Offshore rated on Full Contract Value

11 How Underwriters Insure Wind Energy Risk Three Areas of Risk: The Wind Turbines themselves The Balance of Plant Offshore And Onshore Other, i.e.spares, and supply vessels

12 How Underwriters Insure Wind Energy Risk Hazard Analysis Calculate the Probability Calculate the Severity To Establish the Estimated Maximum Loss - EML

13 How Underwriters Insure Wind Energy Risk An EML The monetary loss, which could be sustained by insurers on a single risk as a result of a single fire or explosion, considered to be within the realms of probability.

14 How Underwriters Insure Wind Energy Risk 79 major hazards Not all insurable Other markets are available to transfer risk

15 How Underwriters Insure Wind Energy Risk The Main Hazards - Turbines Lightning Strike Fire Ice To electrical equipment To mechanical equipment To blades To Towers/Foundations Damage to Nacelle Risk of falling onto property/people Induced vibration Damage to foundations Damage to access ladders Windstorm Damage to blades Damage to mechanical Equipment Damage to Foundations Aircraft Impact Earthquake Damage to foundations Damage to turbines Erosion Damage to Foundations Collision by vessel Turbine Access (Bad Weather)

16 How Underwriters Insure Wind Energy Risk The Main Hazards Balance of Plant Mechanical Breakdown or Fire At main substation Failure of circuit breakers Failure of Power Supply to Substation Substation Access Lightning Terrorism Fire Damage to transformer Windstorm Damage to man cable Aircraft Impact Ice At shore side Induced vibration Damage to foundations Damage to access ladders Damage to Substation Earthquake Erosion Damage to Main Cable Damage to Substation Damage to Main Cable Collision by vessel

17 How Underwriters Insure Wind Energy Risk Non Insurance Risk Turbine Access Key to perform maintenance Some projects only accessible in wave heights up to 1.2m Derivative product excess of x height To pay a fixed sum to Owner or O&M party

18 How Underwriters Insure Wind Energy Risk Construction The Cost between 1.5% - 2.5% of FCV Operating between 1.0% - 1.5% of the FCV or total replacement cost

19 How Underwriters Insure Wind Energy Risk The Deductibles Construction between GBP75,000 GBP250,000 Operating Between GBP50, ,000 Business Interruption (and Advance Revenue) 30 (ish) days

20 Final Thoughts.. Consider Rating/Deductible levels when signing contracts Do not accept onerous requirements from Lenders Work with a solution for all parties not just one Employ good Risk Managers and think about loss control Meet with Insurers face to face

21 Conclusions The Insurance Market has flattened More capacity = more appetite Work closely with Underwriters Consider alternative risk transfer Work closely together to achieve goals The Insurance Market will respond positively

22 Insuring Offshore Wind Farms Fraser McLachlan