The reason for the increase, says GCube's Fraser McLachlan, is that insurance providers are taking on greater levels of risk. "As a direct result of ongoing financial market instability, the liquidity difficulties experienced by the industry, and substantial losses arising from Hurricane Ike in the US, renewable insurance premiums will almost certainly rise," he warns. "A soft market has forced renewable insurance premiums down to a level that is unsustainable in the long term, particularly since providers are being asked to take on greater levels of project risk."
From Windsor, divisional director for renewables, Peter Rush, agrees. "They do have to go up over the next two years, but not in the next few months," he confirms. "There is no doubt about it, between twelve months and two years there will be some rise in premiums." Rush adds: "We have reached the bottom of the trough, so the only way is up."
The market for renewable energy insurance is tracking the growth of the wider renewable energy sector, expanding at some 28% each year. Kevin Collins, also from GCube, says that in addition to the growth in renewables around the world, projects -- particularly wind projects -- are also getting bigger. "Larger wind farms mean greater sums involved and greater values to be insured," he says.
To meet the growth in demand for insurance, GCube, which includes WindPro among its products on offer, says it has secured an increased underwriting capacity, enabling it to write projects up to a value of $800 million.
Although GCube now deals in six renewable energy sectors with products such as BioPro, SolarPro and HydroPro, wind still accounts for 90% of its business which insures 20% of wind capacity around the world. The company comprises two operations, one in the United States and the other based in London, UK.