A new report from renewable energy underwriter GCube Insurance argues that corrective action is needed in the offshore wind industry to induce quality control processes and liability for financial losses.
Analysts noted that the growing emphasis on cost competitiveness has led to prolific cost reduction in the design, manufacture, construction and operation of offshore wind power over the past decade.
And this competitiveness has increasingly come at the expense of quality control, increasing the frequency and severity of insurance claims in the industry, and putting pressure on a tight insurance market.
GCube’s report points out that the combined market losses fell from £ 124million in 2010-2015 to £ 500million by 2020, with the average insurance claim nearly doubling from 1.67million from pounds sterling to 3.08 million pounds during the same period.
Contractor errors and component faults accounted for 55% of these complaints by frequency and 83% of total claims expenses.
According to GCube, the ‘race to the bottom’ in project costs, combined with a sluggish insurance market cycle, exacerbated by general policy conditions, has resulted in significant changes across the insurance market. .
The company therefore suggests that a reassessment is necessary of how risk is allocated to support the longevity of the market, and should be implemented before new players enter the market and integrate the practices.
“Simply put, the insurance industry needs to take a more unified approach to purchasing offshore wind insurance, and the supply chain needs to accept its share of responsibility on claims related to offshore wind,” said Fraser. McLachlan, CEO of GCube.
“The cable protection system problems discovered earlier this year have hopefully drawn attention to the fact that quality control measures must be taken if the industry is to avoid further losses throughout the year. line, “he continued.
“Increased accountability of all parties for their corresponding risks is now required to share the burden of responsibility, enabling the sustainable development of tighter conditions and tailor-made policies. GCube’s long experience in offshore wind insurance gives us significant insight into the underlying challenges and opportunities impacting the market, and we are committed to sharing lessons and recommendations to support our customers and the wind industry. offshore in the broad sense at this critical stage of progress.