As renewable energy projects scale up, so do the risks – and insurers are feeling the strain. Emily Hamilton (pictured), director of risk and insurance services at INTECH Risk Management, said claims have risen sharply over the past two decades, leading to tighter capacity and reduced coverage.
“Claims experience has grown a lot… which has ultimately led to a lot more capacity constraints and coverage restrictions,” she said.
For underwriters, that has meant a reset in how risk is assessed, particularly as project values climb into the hundreds of millions. “They’re a lot bigger, it’s more expensive to build them. And insure them, particularly,” said Hamilton.
Hamilton flagged climate-driven volatility as the most urgent threat. “Weather volatility, construction operational delays, grid integration challenges… those are additional risk factors,” she said. Projects in remote or northern areas bring added complexity, with access issues increasing operational risk.
Natural catastrophe exposures – hail, wildfire and convective storms – are increasingly a focus. “NatCat tends to be a major concern point,” she said. “If that [hail] hits during construction, you have to redo all the panels. It can be disastrous.”
Until recently, Canadian developers could secure full limits for NatCat cover. That’s changing fast. “Now we’re looking more at location-specific models and increased scrutiny on underwriting material,” Hamilton said. Solar construction is particularly affected, with convective storms often excluded from full coverage. “You’re not necessarily going to get full limits,” she said.
Developers are also grappling with global supply chain fragility. Key components like wind turbines, solar panels and batteries often originate from multiple regions, exposing projects to bottlenecks and political shocks.
“There’s a lot of global interdependency on where the components are originating from, and how they’re getting from Point A to Point B,” said Hamilton. “It can cause a lot of problems… especially for key components.”
Shifting policy and tariff regimes, particularly in the US, are already affecting Canadian projects. “There’s a lot of intermingling,” she said. “Tariffs change the replacement costs… and if financial incentives that were initially in place to build a project are no longer there, that’s going to change how lenders or developers are focusing.”
Emerging technologies like battery storage and AI offer opportunities – but they also introduce new risks. Insurance markets remain cautious.
“Insurance is pretty slow and likes to know what they’re getting into before they get into it,” said Hamilton. AI offers advantages in speed and precision, potentially enabling more accurate pricing and tailored policies. “They’re going to analyze a lot of data very quickly,” she said.
But AI systems also bring new exposures – especially around cybersecurity and data privacy. “The risk of a cyber breach could really just cripple something,” she said.
Battery storage, too, comes with specific risks. “There’s a huge risk for overheating… which leads to property damage,” said Hamilton. Losses affect experience, and experience affects future premiums.
Another emerging risk is obsolescence. As technologies evolve rapidly, developers are facing scenarios where installed systems become outdated before the project life cycle ends.
“What made sense… might become obsolete before the end of life cycle of a project,” she said. “You can’t insure against that.” For long-term planning, this risk is increasingly hard to ignore.
Hamilton sees insurers not just as risk managers but as catalysts for change. “Insurance really is a unique space because it can drive a lot of innovation,” she said. If insurers are comfortable, she added, that confidence spreads across developers, lenders and regulators.
She predicted a more active role for insurers in shaping the clean energy transition: “Tailored policies, engaging in research, collaborating with the government, academia, technology… to figure out innovative solutions.”
As climate, political and tech risks become more entangled, insurers will need to move faster – and lean into complexity – if they want to remain relevant partners in the energy shift.
