Growing renewables sector remains attractive

Renewable energy sources are playing a bigger and increasingly important role in the energy market, making this sector increasingly attractive to insurers, Mike Bernay, managing director and CEO at energy specialist underwriter PERse, part of the Ryan Specialty Group, told PCI Today.

Bernay said that 50 percent of all power projects built and created globally in 2015 were renewable—a big increase from just seven to 10 years ago, when it wasn’t even 30 percent.

“The energy sector is a big segment of the insurance market anyway, especially when you look at London where you have everything—energy, power and derivatives therein,” Bernay said.

“We specialise in renewables and have done for the last 16 years. Renewables have come a long way in that time and it’s been interesting to look at where the marketplace is in reaction to all the recent changes.”

He said that the capacity flowing into the sector has softened rates to the point where they are as low as he has ever seen. “Yet the market still attracts additional capacity, even though it’s harder to make a profit in the overall sector,” he said.

“New capacity is coming in thinking that it can do things differently, or better—I don’t know which. Some of it is just chasing premium and is very naïve underwriting.”

Predictions were that the market would have reached the bottom of rate reductions by the end 2016. However, Bernay said, the sheer amount of capital still coming into the market may have quashed this hope.

Despite this, he said it remains an attractive market for PERse, especially as it is starting to see more investment in different types of renewable technologies.

“One of the reasons we like where we sit is that we think there’s a lot more money coming into the renewable energy sector,” said Bernay. “With the experience we have as an organisation, we’re looking at some pretty good organic premium growth, but the growth is certainly not from rates.”

Bernay said energy-related technologies are changing rapidly meaning some underwriters and capital providers have a concern about the technology being too prototypical. “But frankly that’s the nature of our business,” he said.

“For us, understanding it and relating to it means that we are in a better position to pick the good from the bad, whether it’s geothermal, wind, solar or hydro.”

PERse offers property coverage for wind, solar, bio, hydro, geothermal and ocean power facilities. It also offers coverage options for such risks that occur during the course of transit, delay in startup, construction, operations, machinery breakdown, business interruption and other liabilities.