The financial impacts of natural catastrophe events are outpacing the development of mitigation strategies in the North American renewables market, says GCube Insurance.
In its North American Nat Cat Update, GCube said that market correction hasn’t gone far enough to address the growing severity of natural catastrophe and extreme weather events.
A softening of rates could jeopardise the sustainable growth of US wind and solar faced with these evolving risks, it highlighted.
The US renewables market has just experienced its worst summer on record for natural catastrophe claims, with unmodelled extreme weather events proving far more prevalent and damaging than traditional natural catastrophe events.
The reported said that hail losses experienced this year in Texas are projected to reach $300m almost 10 times the estimated losses from 2020’s Hurricane Hanna.
While total claims values are still being calculated, multiple instances of losses exceeding sub-limits of up to $50m, due to hail, tornados, and derechos, “make clear the need” for improved modelling and the more effective use of existing weather data.
Solar technologies, for example, have proven particularly vulnerable to hail, exposing weaknesses in the sector’s current standards of impact testing.
“While the increasing frequency of Extreme Weather and Nat Cat events is not surprising to us, the rising severity of losses, and the industry’s continued difficulty in managing these risks, is a concerning trend,” said Fraser McLachlan, CEO, GCube.
“The unprecedented growth potential unlocked by the Inflation Reduction Act will count for little if the North American renewables sector is unable to combat Extreme weather risks.”