Damage to cables is the top cause of insurance claims, followed by turbine failure, according to a new report released by insurance firm Allianz Capital.
In one of its largest offshore wind insurance markets, Germany and Central Eastern Europe, the company has seen 53% of claims by value from 2014 to 2020 relate to cable damage, followed by turbine failure (20%).
In its report, “A turning point for offshore wind”, the insurer stated: “From the loss of entire cables during transport to the bending of cables during installation, cable losses have incurred multi-million-dollar losses in offshore wind as cable failure can potentially put a whole network of turbines out of commission.”
Allianz Commercial’s global leader offshore renewables and upstream energy Adam Reed said cable risk is critical and therefore the quality of service is vital.
He added: “Contractors need to provide assurance they have the required expertise to remedy incidents and that they can source replacement components quickly in order to contain losses incurred during downtime.
“From an underwriting perspective, with subsea cabling work insurers pay close attention to the type of cabling used, the kind of vessels involved, the communication between client and contractor, and how often qualified risk engineers will make site visits to oversee proceedings.”
The report highlights growth opportunities, tech innovations, risk trends and loss patterns for the global industry.
It highlighted speed of build-out is creating pressure on materials and supply chains, port infrastructure, and available construction and maintenance vessels.
Meanwhile bigger turbines and new technology drive bigger exposures for insurers which need to be understood in partnership with developers.
Allianz Commercial’s senior risk consultant, natural resources, Wei Zhang said: “With new technological approaches and an increase in turbine size comes a corresponding increase in risk.
“We are closely monitoring the many innovations in the offshore wind industry which include prototypical technologies, pilot projects, and evolving standardization.
“These new and unproven technologies often come with a lack of technical maturity and data available.
“By partnering with clients in the early stages of projects, and exchanging knowledge and learnings, all parties will gain a greater understanding of the exposures involved.”