ASTIN 2021 Online Colloquium - Renewable Energy Insurance - An Underwriter's Perspective
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ASTIN 2021 Online Colloquium Renewable Energy Insurance – An Underwriter’s Perspective Sam Millard 18.05.2021
Introducing Codan
RSA & Codan has a FTSE100 listed UK & Western Europe, 9 million customers in
strong and well- general insurer and a Canada and more than 100
balanced portfolio leading provider of Scandinavia. territories; approx
13.500 employees.
with major commercial insurance
operations across for more than 300
years.
the globe.
Strong reputation for RSA is financially The first carbon Knowledge and
technical excellence. strong. S&P rated: A neutral insurer. understanding of
customer need tailors
our service.
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Agenda o Introduction to the business area e.g. what kind of assets / coverages are we talking about o Codan’s expertise o Where & how actuaries are involved o Volume of exposure / claims data and the challenges this presents o How to handle the consistently emerging risk profile
Renewable energy
Different technologies, including: Rapid global growth
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Renewable energy Offshore wind 6
Products / coverages
There are plenty of available covers e.g.
M&A, TPL, D&O, Cyber, Terrorism,
lack of wind, product efficacy etc etc
Today I will focus on
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https://www.codan.dk/renewable/bespoke-underwriting-solutions
Providing capacity to more than half of the world’s
offshore wind related construction
1. West of Dudden Sands (389 MW) 20. Horns Rev II (209 MW) 39. Vindeby 58. EirGrid 74. Changhua County 88. Dong Hai 1 –
Phase 2
2. Gwynt Y môr (576 MW) 21. Rhyl Flats (90 MW) 40. Bockstiegen 59. NordLink 75. Greater Changhua
89. Hoah Binh 1 –
3. Global Tech I (400 MW) 22. Provence Grand Large 41. Nysted / Rødsand (166 MW) Phase 2
60. NSN Link 76. Changfang Xidao
4. Dan Tysk (288 MW) 23. Rødsand II (207 MW) 42. North Hoyle (60 MW) 90. Tra Vinh 1-3
61. Nemo Link 77. Southwest Offshore –
5. Baltic II (288 MW) 24. Wave Hub 43. Lynn & Inner Dowsing (194 MW) 91. St Brieuc
Korea
6. Riffgat (108 MW) 25. Samsø 44. Scroby Sands (60 MW) 62. Hohe See 92. Provence Grand
78. Yudean China (portfolio) Large
7. Meerwind (288 MW) 26. Hywind 45. Blyth 63. Merkur Offshore
93. TetraSpar
79. CGN China (portfolio) Demonstrator
8. Butendiek (288MW) 27. Horns Rev I (160 MW) 46. Northwind (272 MW)
64. Albatros
9. Karehamn (48 MW) 28.Lillgrund (110 MW) 47. Amrunbank (288 MW) 80. Akita Noshiro
65. East Anglia 1
10. Humber Gateway (220 MW) 29. Borkum West II (200 MW) 48. Q10 (129 MW) 81. Naert Na Gaoithe
66. Deutsche Bucht
11. Teesside (62 MW) 30. C-Power Phase II+III (295 MW) 49. BorWin 1 & 2
82. Kaskasi
12. Baltic I (48 MW) 31. Alpha Ventus (60 MW) 50. SylWin 1 67. IFA 2
83. Hornsea I
13. Robin Rigg (180 MW) 32. Nordsee Ost (288 MW) 51. HelWin 1 & 2 68. Kincardine
14. Barrow (90 MW) 33. Sheringham Shoal (315 MW) 52. DolWin 1 & 2 84. Fecamp
69. Formosa 1, phase 2
15. Burbo Bank (90 MW) 34. Ormonde (150 MW) 53. Fukushima Recovery Project phase 1 + 3 85. SeaGreen
70. Triton Knoll
16. Kentish Flats (90 MW) 35. London Array Phase I (630 MW) 54. Gemini Offshore Wind Farm (600MW)
86. Beatrice
17. Greater Gabbard (504 MW) 36. Lincs (270 MW) 55. Wikinger 71. WindFloat Atlantic
87. Tra Vinh
18. Thanet (300 MW) 37. Utgrunden 56. Nordsee One 72. Yunlin
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19. Lillgrund (110 MW) 38. Ytre Stengrund 57. WindFloat
73. Formosa 2
OUR OFFSHORE RENEWABLE ENERGY TEAM
Sales & Underwriting
Brendan Reed, Nordic Director CE&RE
Sam Millard Chief Underwriter Tech Lines
Igor Silence Global Head of Offshore Wind Energy
Tom D. Kristiansen Senior Risk Engineer, BSEE
Lutz Weidtke, Senior UW
Henrik Møller Senior Specialist Underwriter
Jan Petersen Senior UW
Michael Schlüter Senior UW
Jakob Rasmussen Strategic Sales and Business Development
Claims Management Support functions
Torben Larsen, Manager, B.sc. Including:
Claus Hein Senior Large Claims Specialist, B.sc Portfolio Management
Jørn Heintz Senior Claims Handler Pricing
Johan Nissen Senior Claims Handler Reserving
Finn Thyrring Manager, Senior Risk Engineer, B.sc. Reinsurance
Product development
Peter Krarup Senior Risk Engineer
Kasper Kroman Risk Engineer
Mads Nørsøller Senior Risk Engineer
Client team tailored to service our individual clients and brokers
Key components of an offshore wind farm
Wind turbines & Offshore substations Cables
Foundations
10New Technologies from the beginning – “unproven” …..
… but not unknown – a general view:
• Not a new situation for the insurance
industry as we have dealt with this for the
last 30 years
• Projects always include unproven elements
like new suppliers, environment, soil
condition and execution
• Proven technology is considered after of
trouble-free installation, testing and
successful 8000 hours operation
1991 2004 2008 2010 2017 2018 ???
11What has changed beyond NEW technologies from a risk
perspective?
• Bigger projects = larger investments = higher sum insured / higher limits
• New risks/environment = NATCAT, far from shore
• Higher pressure on Lower Cost of Energy = costs to be reduced
• Faster development (no track-record available when risk needs to be bound by insurance)
• Besides fast technical development, also extensions of wordings driven by lenders and developers vs. less
track-record of technology / components and contractors
• Territorial expansion
12Underwriting Considerations
Technology risks
Proven technologies Physical factors
Costs to repair Distance from shore
Vessel costs, long term charter Sea & geography
Water depth
Insurance
Terms and conditions
Deductibles
Defects exclusions Contractors
Series losses Experience
Sublimits Tools and equipment
Delay in startup Installation methodology
Warranties & extended and timeline
maintenance periods
13The role of actuaries
Volume of data
Approximately how many entries are in Codan’s offshore wind claims database (2002 – 2021) – which
I assume is (by far) the largest industry data-set:
a) 120
b) 1,200
c) 12,000
14Approximately how many entries are in Codan’s offshore wind claims database (2002 – 2021) – which
I assume is (by far) the largest industry data-set:
a) 120
b) 1,200
c) 12,000
Average a little over 1 per week during the full period
15Reserving challenges
Case study:
Customer contacts Codan: ”My cable stopped working at 4am – we are trying to establish what
has happened”.
- Is there damage or not? Where has the damage occurred?
- What is the root cause (do any exclusions apply)?
- What kind of set-up will be required for investigation & repair?
- What is the likely downtime?
- Will there be subrogation opportunities?
Case reserve?
Technical reserves
- ‘Medium tail’
- Reporting delays (FNOL)
- Portfolio risk-mix
16Pricing challenges
• Continuously evolving risk profile
• 100+ ‘UW factors’ in pricing tool but relatively limited claims data
• Varied scope of cover
• Rapid industry cost reduction (at least on CAPEX, if not repairs)
• Uncertaintly over correct large-loss funding
- No ‘market standard’ (e.g. Lloyd’s, SwissRe) loss curves
• Vulnerability to particular perils e.g. earthquake, tropical windstorm
17Future underwriting challenge 18 https://www.windisland.dk/
Closing remarks
• Great to see initiative and technical development in offshore wind
• Strong cross-function collaboration is essential. Pricing & reserving actuaries
cannot operate effectively without input from
- Claims handlers
- Underwriters
- Business leaders
etc
• The specific profile of this sector means that actuaries with a creative, open-
minded approach will add most value
19Thank you,
Any Questions?
20Disclaimer Codan Forsikring A/S This PowerPoint presentation (the “Presentation”) is offered to you by Codan Forsikring A/S (company reg. no. 10 52 96 38) (“Codan”) and is for the exclusive use of the persons to whom it is addressed. The content of the Presentation, including all texts, images and audio fragments, is protected by copyright laws and may not be copied, distributed, published, reproduced or disclosed without Codan’s prior written consent. No changes whatsoever may be made to the content. The Presentation does not purport to be comprehensive or to contain all the information that a recipient may need in relation to the proposed transaction or purpose, for which it was produced. Interested parties should conduct and rely on their own investigation and analysis and not the data contained in the Presentation. Codan endeavours to provide correct and up-to-date information, but Codan makes no representations regarding the correctness, accuracy or completeness of the Presentation. The Presentation may contain forward-looking statements regarding the intentions, expectations, objectives or targets of Codan. Any such forward-looking statements are based on assumptions that Codan believes to be reasonable, but are subject to a wide range of risks and uncertainties and, therefore, there can be no assurance that actual results will meet those expressed or implied by such forward-looking statements. Codan does not accept any liability for any (alleged) damage arising from the Presentation or for any consequences of activities undertaken based on data or information contained therein. By receiving the Presentation, you accept the terms and conditions above. 21
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