As illustrated in Figure 6 and 7 , the data demonstrates that significant claims activity across both wind and solar projects originated from Contractor Error which has accounted for ~68% of claims quantum for solar projects and ~36% for wind projects. This risk has been a major focus for insurers and for new construction projects insurers are seeking increased information on whom are the contracting parties involved in the projects and their experience on projects of a similar nature. Figure 7 also shows that Mechanical Breakdown - driven by wind projects - is the highest claim type by volume with ~46% for all losses. According to GCube’s data, as turbine size increased over the 2016-2020 period, general Mechanical Breakdown losses grew as a result. GCube further noted in their data that one of the biggest contributing factors of the high Mechanical Breakdown claim volume arose from blade damage as a result of lightning strikes and blade failures as this data point is captured under Machinery Breakdown, hence the volume if a lot higher as a part of the whole.
Whilst Contractor Error and Mechanical Breakdown losses account for the majority of claims activity for wind and solar projects, losses from these factors are compounded by claims occurring from Natural Catastrophe events including Flood, Hail, Lightning and Storm which accounted for ~22% on solar projects and ~10% on wind projects. Whilst the claims data provided by GCube is not supported by premium and loss ratio data showing actual sector underwriting performance, it does provide a background to the adjusted underwriting process that insurers have implemented over the past 12 to 24 months. Insurers continue to focus on increased levels of underwriting information, notably contractor / sub-contractor experience and site location data / project design specification, to support their revised underwriting guidelines and to drive profitability back to a sector that has underperformed for a sustained period of time.
“Contractor error has been a major contributor to portfolio claims experience over the past 3 years.”
Paul Nicholls, Senior Claims Adjuster, GCube
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