Renewable Energy: Navigating a Hard E&S Insurance Market

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BY:
Loren Henry

Broker

July 14, 2021

According to Deloitte’s 2021 Renewable Energy Industry Outlook report, growth in renewable energy is set to accelerate as the Biden administration rejoins the Paris Agreement, invests $2 trillion in clean energy and aims for a complete decarbonizing of the power sector by 2035 for net-zero carbon emissions by 2050.

Today, the demand for renewable energy is as wide as it is diverse. So much so, in fact, that insuring green energy businesses requires multifaceted insurance solutions that are anything but standard. It also requires experienced brokers and underwriters who understand renewable energy risks and know how to best navigate the complexities of the excess and surplus (E&S) market — especially in the current hard insurance market environment.

Hard Insurance Market Considerations
The global pandemic, new and emerging risks, and the ever-evolving needs of the renewable energy industry further demonstrate the important role non-admitted products play in addressing the insurance needs of the green energy industry. But a hard market environment, in which there is a high demand for insurance but a limited number of carriers that are willing to offer coverage, makes it even more challenging for brokers to secure coverage in the E&S market for their renewable energy clients.

Risk managers looking to grow their book of renewable energy clients or those who have policies coming up for renewal will find themselves in a better position to navigate this hard market by considering the following key points:

  • Sell Carriers on your Submission. A hard market environment typically results in carriers that are tightening their belts and aren’t exactly jumping at every new submission — especially in an emerging industry such as green energy. As carriers evaluate new business applications in an effort to better manage their risk exposure, it’s important to tell the story of your submission. For example, in addition to providing full and complete applications and loss runs, draft and submit a brief narrative about the business that includes when it was established, how it operates, and its management’s commitment to risk mitigation, service and worker safety.
  • Get New Business and Renewals in Early. Building in a longer lead time in a hard market affords underwriters the time needed to properly review and assess a risk — especially in the E&S lines market and with more complex accounts. And while it’s important to communicate with carriers and underwriters during the application process, you don’t want to check in every day to see where your submission is. Keep in mind that with rapid underwriting changes due to reinsurance issues, quotes are likely to be released at the last minute.
  • Engage with Carriers and Underwriters. In a hard market, as insurers are decreasing their writing capacity in an effort to limit their risk exposures, it’s important to maintain a good working relationship with carriers and underwriters. Having open communication will not only help make the application/renewal process easier, but it will also demonstrate your commitment to writing quality business. The fact is, hard market conditions won’t last forever. But until things turn around, maintaining a positive working relationship with carriers and underwriters in an uncertain marketplace can go a long way in helping them feel more comfortable in considering competitive rates and terms.

Conclusion
Despite tough hard market conditions, surplus lines carriers remain optimistic that they can continue to meet the growing insurance demands of the renewable energy industry. And while brokers continue to be challenged, the ability to remain flexible, maintain open communication with carriers, and advocate on behalf of your clients will prove beneficial.

We help renewable energy businesses nationwide meet the specialized insurance challenges of the rapidly growing renewable energy sector. To learn about our unique insurance solutions for this growing industry, contact Loren Henry at loren.henry@amwins.com or 619-541-4265.

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