How Insurance Companies Pursue ESG Targets

People working on ESG goals in insurance

ESG aspects play an increasingly important role when it comes to allocating insurers’ monies. Apart from these legal requirements insurers have already installed many ESG measures in their companies on a voluntary basis.

ESG and Sustainable Risk Management

Media headlines are dominated these days by the tragic news of the Ukraine war, the threat of further SARS-
CoV-2 mutations leading to new pandemic phenomena as well as the spectre of inflation that is haunting the global community. While these problems may be overcome in the medium-term, the fight against climate change and other widespread problems is here to stay.

Insurance as key stakeholder in the Green Deal

In their function as both risk carriers and investors, insurance companies are expected to contribute to many measures within the framework of the European Union Green Deal and to influence society in general. Although they offer intangible products and will thus probably not pollute the environment, there is a lot of things insurers can do. EU legislation has set out the rules for this part of the financial market through the:

  • Taxonomy regulation (2020/852 EU) applicable to all branches of the economy
  • The Regulation 2019/2088 “on sustainability-related disclosures in the financial services sector
  • The Delegated Regulation 2021/1257 concerning “the integration of sustainability factors, risks and preferences into the product oversight and governance requirements for insurance undertakings and insurance distributors and into the rules on conduct of business and investment advice for insurance-based investment products”, in force as from 2nd August, 2022
  • A set of Regulatory Technical Standards issued by European supervisor IOPA to be published during the course of this year.

Apart from these legal requirements insurers have already installed many ESG measures in their companies on a voluntary basis, the details of which are published in annual sustainability reports – attached, in most cases, to the annual financial reports. There is no standard yet regarding content and presentation of these reports, unlike financial reports that follow specific standards (e.g. IFRS –International Financial Reporting Standards). Although reports tend to look like marketing presentations, their contents are impressive, showing first substantial results and the direction further developments may take. Exemplary activities comprise the following fields of operation.

Underwriting and insurance products

Major international insurance groups founded the Net Zero Insurance Alliance in 2021 with the target to reduce insurance of coal risks (mining, transport, thermal use) to zero and to decrease the capacities for oil and gas risks (prospection, production, transport, thermal use). Other insurers will follow.

Moreover, there is a clear increase in offering insurance capacity and services for new, green technology despite
initial experiences that new technical applications may constitute a higher risk exposure.

It can be expected that insurance questionnaires will contain queries not only in respect of traditional risks
but also regarding details of ESG in general. After 2023, sustainability reports will become one of the basic documents for underwriting decisions and the calculation of insurance rates.

Investment and financial products

ESG aspects play an increasingly important role when it comes to allocating insurers’ monies. The Net-Zero Asset Owner Alliance, established by large asset owners stipulates that there will be no purchase of shares or granting of loans for industries engaged in coal and other environmentally critical business or for those who cannot give satisfactory answers in respect of their general ESG behaviour and measures.

These monies will be reinvested in promising new green technologies and projects that develop both enviromental and social sustainability on a world-wide scale. Investments focus not only on energy production but also on projects for the sustainable use of water and other natural resources or for cleaning polluted areas. Deciding on an investment therefore means considering not only the enterprise itself but also its suppliers, clients and cooperation partners.

This change in investment strategies not only concerns insurers’ own investments but extends to the creation of
investment products in connection with life and pension insurance, the so called PRIIP. First data show that billions of Euros have already been re-allocated in this manner.

Insurance operations and ESG

As the main operation costs of insurance companies consist of expenses for personnel, IT, energy and office space, many decisions can be made in compliance with ESG targets.

Remote working, which had its breakthrough during the pandemic, will be maintained. It reduces traffic volumes
because employees no longer commute every day, and cuts on costs for heating and cooling office spaces. Energy supply will shift to green energy produced on the spot by e.g. solar panels mounted on rooftops. Corporate build-ings with a glass facade will be equipped with better shading, and (air) travel for business purposes will be reduced to a large extent. The supply of office equipment and energy is constantly evaluated, material will have to be produced in a sustainable way, and energy will need green certificates. The use of paper has already been reduced through electronic communication with clients, partners and within the company.

Social and Governance targets

Some companies are running skills enhancement programmes to make employees aware of and fit for ESG
requirements, while increasing job satisfaction.

Gender diversity, up to management board level, has already been given much more attention than in the past
years. The focus is now on equal training opportunities for both sexes at an early stage with clear perspectives for further career options that are based on skills and knowledge.

Many companies and their employees support initiatives that reduce the vulnerability of society beyond the scope of insurance indemnities by lending a helping hand in catastrophes, assisting and supporting our elderly, refugees or even precarious households both financially and through direct action.

Subsidies and grants are given to non-profit organisations, educational facilities, research laboratories and other institutions in order to overcome the problems we are facing in the entire world.

The insurance sector is very well capitalised, there is knowledge about opportunities and risks as well as an acute sense for catastrophes and how to avoid them. These factors provide the grounds for the industry contributing its fair share to making the world a better and safer place. This is it what ESG is about.

This article is a part of our latest Spotlight publication focusing on supply chain issues. Read the publication and learn more about how you can protect your business from changes and unpredictable supply chain disruptions.

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GrECo Specialty strengthens its Energy, Power & Mining practice

Pawel Kowalewski, renowned expert in the energy sector, will develop power & renewables solutions.

GrECo Specialty, a dedicated specialty unit of GrECo, the leading risk and insurance consultant in Central and Eastern Europe, is further expanding its services for the energy sector. Due to the ever increasing importance of the power and renewables sector a dedicated division was established to better support our clients in this industry. The new practice leader Pawel Kowalewski ACII, ARM, ARe will be heading the Power & Renewables division within the Group Practice Energy, Power & Mining.

Pawel is a seasoned insurance and financial services professional with 28 years’ experience in the industry. He joins GrECo Specialty from a leading Polish power utility conglomerate, where he was the Group Head of Risk Management and Insurance.

A major upheaval in the area of large corporate specialty insurance is expected in the upcoming years, as insurance capacities are withdrawing from carbon-intensive industries. Our objective is to provide existing and prospective clients of the Energy, Power & Mining Group Practice with state-of-the-art risk transfer solutions and optimise their Total Cost of Risk.

The newly formed division Power & Renewables has a clearly defined mission:

  • Provide bespoke re/insurance and Alternative Risk Transfer solutions to companies operating conventional and emerging technologies;
  • Long-term orientation to serve clients requiring sufficient time to transition and adapt to the future of energy, at the same time maintaining agility and leanness to help them achieve short-term objectives;
  • Be a knowledge-driven organisation utilising advanced technology to assist GrECo clients with building and maintaining resilience;
  • Become first mover to create cutting-edge risk & insurance solutions for the Power & Renewables sector.

Zviadi Vardosanidze, General Manager of GrECo Specialty and Group Practice Leader Energy, Power & Mining is happy that “Pawel has exceptional knowledge and understanding of client’s objectives, concerns and constraints, as he has successfully managed the overhaul of insurance programs for the largest power producer in CEE. In addition, he has excellent relationships with key stakeholders in the re/insurance industry. I am looking forward to further develop our Group Practice.”

Pawel Kowalewski

Practice Leader Power & Renewables Division

T +48 507 085 066

Image by Pexels from Pixabay

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These four climate risks should be on managers’ agendas

Climate change could eclipse Covid-19. As with the pandemic, no one is immune, but this time there is no saving vaccine. We are not dealing with a temporary risk here. What it needs now: preparations and coordinated action.

If no climate protection measures are taken, there could be global losses of more than 18% of the current gross domestic product by the middle of the century. This is according to the Swiss Re Institute’s “The Economics of Climate Change” study on the economic impacts of climate change.

Asian countries will feel climate change most acutely. China’s economy could shrink by a quarter in the worst climate scenario, and the economies of the USA and the Eurozone by around 10 % each. The Swiss Re Institute study also shows that Asia, Latin America, the Middle East and Africa have the least capacity to adapt to the changes. Austrian and German companies that have important sales markets as well as investment and production locations in the aforementioned regions should keep an eye on the following four climate risk areas: physical risks, transition risks, supply chain risks and liability risks.

1. Physical location risks

The results of the study are clear: no country will be spared from climate change. The physical consequences are already becoming visible, in the form of frequent and extreme severe weather events and natural disasters.

Due to increasing urbanisation and building in high-risk areas, such as flood plains, there are more and more properties located in hazardous areas. This increasing risk inevitably means that companies have to work ever more closely with their insurance companies. However, some risks can be countered by more robust infrastructure. When building new sites, natural hazard risks such as mudslides and landslides should be clarified.

Better data collection and use will help companies understand the full extent of their exposure. Swiss Re’s CatNet tool is a good example of this. It allows companies to analyse the impact of climate change in different regions of the world.

2. Transition risks to a low-carbon future

To avoid the most serious impacts of climate change, all stakeholders should pull together to reduce greenhouse gas emissions. With the increasing introduction of regulations and measures, this will be an issue that every company will have to deal with to a greater or lesser extent in the future.

CO2 taxes and other sector-specific taxes will impact some industries more than others. Similarly, switching to less CO2-intensive production pathways and climate-resilient technologies and products will be easier for some than others. These changes will take time, but to avoid additional business costs, action is needed now.

Another very present topic is electricity generation. According to the Federal Ministry for the Environment, Climate Protection, Energy, Mobility, Innovation and Technology, 100 % of total electricity consumption in Austria is to be covered by renewable energy sources by 2030.

3. Supply chain risks

In 2020, the far-reaching consequences of large-scale supply chain disruptions have already become apparent. Companies must continue to be prepared for the increased number of disruptions and take this increased risk into account.
Agile companies are looking ahead with strategies to respond to supply chain disruptions and supplier changes. This requires merging internal data with data from various external sources to have a clearer and always up-to-date overview. This also means that transparency in supply chains is becoming increasingly important, especially when quick responses are required.

4. Liability risks

The attitude of companies and their actions in relation to ESG challenges are increasingly seen as a liability risk. Strict controls by the public and investors are pushing companies to focus more on their social and environmental performance than before.

In addition, underwriters will also pay more and more attention to ESG risks. Companies should therefore use data collection technologies even more intensively. This transparency also helps risk carriers to develop adequate insurance cover. The stricter due diligence checks will also lead to an increase in liability risk.

Risk minimisation through data use

Implementing appropriate data collection and analysis measures are among the most important concrete steps companies can take now to better prepare for the impacts of climate change. This data can help companies minimise risks and fully prepare for the impact of physical, transition, supply chain and liability risks across business sectors.

We are all already feeling the effects of climate change. The recent floods in Austria and Germany or the tornado in the Czech Republic show us mercilessly how strongly we depend on an intact environment. Companies should set the right course today in order to remain safe and successful in the future.

Tanja Dippel
Costumer & Distribution
Managerin Austria
T +43 664 134 29 55
Tanja Dippel is Customer & Distribution Manager for Austria and Central & Eastern Europe at Swiss Re Corporate Solutions and has over 20 years of experience in the insurance industry. Before joining the company in 2017, she worked on the broker side at GrECo and Marsh.

Andreas Berger
CEO Swiss Re Corporate Solutions
Andreas Berger is CEO of the industrial insurer Swiss Re Corporate Solutions and a member of the Executive Board of Swiss Re. With over 25 years of insurance experience, he joined the Swiss reinsurer in 2019 from the Board of Management of the Allianz Group’s industrial insurer.

Swiss Re Corporate Solutions
Swiss Re Corporate Solutions provides risk transfer solutions for large and medium-sized industrial clients worldwide. Innovative and individually tailored products and standard insurance coverages help make companies more resilient. The industry-leading claims service provides companies with additional financial security. Swiss Re Corporate Solutions serves clients around the world and can count on the financial strength of the Swiss Re Group. For more information about Swiss Re Corporate Solutions, please visit

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Rudolf Schiel

Practice Leader Property & Engineering

T +43 664 822 27 58

Offshore Wind Insurance

Companies investing in the offshore wind sector need a risk partner with the knowledge and experience to deliver tailored risk advisory and insurance solutions. In addition, having an insurance partner capable and experienced in managing finance parties’ expectations and working with all interested parties in the setting of realistic and reasonable insurance requirements within the debt facility agreements is crucial – a skill set which GrECo have market leading expertise in. Choosing the right insurance advisory and placement partner will have a significant and long-term impact on the legal, procurement and insurance strategy, with the target of reducing costs and maximizing insurance and risk management solutions.

Supporting the entire lifecycle

We have the knowledge, experience and commitment to provide clients with in-depth, specialist offshore wind expertise. We work with offshore wind projects to offer contractual risk allocation, project and financial risk management analysis and create insurance strategies that enable our clients to protect cash flow and secure scarce capital across the entire offshore wind lifecycle (Bidding, Consent, Development, Procurement, Construction, Operation and Decommissioning.)

Innovative solutions backed by long-term experience

GrECo is independent, privately-owned company; as such our success and reputation depend on strong partnership with each client. GrECo is able to deliver an innovative, holistic approach to offshore wind project risk and insurance in the local and international insurance markets, underpinned by committed service excellence, a thorough understanding of the offshore wind project’s challenges and complete cost transparency for the solutions proposed.

GrECo together with partners have a proven track record of meeting client’s risk management and insurance requirements, offering deep sector knowledge and service excellence throughout the lifecycle of major renewable energy projects to project developers, operators and investors.

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Zviadi Vardosanidze

Group Practice Leader Energy, Power and Mining

T +43 664 962 39 04

Michał Olszewski

Director – Energy & Mining Specialty at GrECo Poland

T +48 22 39 33 358

Climate change & Co

How technological development and big data can improve the resilience of companies to natural disasters. Parametric insurance is establishing itself as an alternative to covering natural catastrophe. Swiss Re reports!

The demand for parametric insurance policies is growing, last but not least because their benefits go beyond weather-related events. From the Internet of Things, automation and sensors, to artificial intelligence and big data to smart data, the business world is technologically more advanced than ever before.
Existing systems and supply chains are digitised, production facilities are becoming automated, and factories and microchip sensors are starting to predict maintenance requirements and potential breakdowns before they occur.

All this technology generates a lot of data – big data – that can offer great insights into the next major risk event. And insurers are making this data the focus of their innovative risk solutions so that their clients can be more resistant to diverse risks such as climate, weather and natural disasters.

Wind risk as an example

Let us take a practical example. An energy supply company in Europe classifies winter storms as a major risk to its power lines. Strong winds may not only cause direct damage to the distribution network, but also uproot whole trees or break off branches which then fall onto the (power) lines.

The client was searching for efficient protection for its nationwide low-voltage distribution network. The risks for power lines were practically not insurable with traditional insurance solutions. The client was also keen to avoid any uncertainties with claims processing (due to it being difficult to estimate the costs for the reconstruction and upgrading of the network) and to ensure that quick payment was made in the event of a claim.

The parametric insurance solution enabled the client’s wind risk to be covered. An index was developed in close cooperation with the client, which describes the damage as a function of the measured peak wind speeds. As the wind data is calculated independently and is available quickly, the client can expect the claim to be dealt with fast and simply in the event of an incident.

As there are sometimes large sums of money at stake, many industries are actively looking for more innovative risk transfer options to protect themselves against the increasing threat caused by weather-related damage.

Technology and data are a considerable part of the solution here. Weather stations and measuring instruments provide clear and independent information on wind conditions. Along with the historic data from these measuring stations, the information is structured as a customised payment formula in order to depict the underlying risk in the best possible way.

The data from the measuring stations is aligned with predefined triggers determined in cooperation with the client in order to define the time and amount of the payment.

The advantages

There are three main advantages to parametric insurance.

  1. Parametric insurance policies are a simplified and more transparent version of traditional insurance policies, as fixed payments are made if the measured data (e.g. wind speeds, water levels, soil accelerations) reach or exceed critical threshold values. Parametric insurance policies are therefore geared towards the incident and not the actual loss.
  2. Another advantage is the quick payment of claims. It often takes months or even years with a traditional insurance policy until claims resulting from business interruptions (BI) are settled, as the loss must be analysed and confirmed before a payout is agreed. A parametric insurance policy reduces the steps to payment of the claim. On-site visits no longer have to be made and forensic examinations and claims settlements no longer have to be completed before a claim is paid. If the insurance trigger is activated, the payment will be made in a few days without delay.
  3. The certainty of compensation is also advantageous. There are often uncertainties with traditional insurance policies: you sometimes only know how high the insurance cover is once a loss situation has been examined. There may also be disputes about the amounts. Parametric insurance policies put an end to these uncertainties, as all payments are agreed in advance and are therefore fixed. The payments can be used to cover all direct and indirect costs incurred as a result of the insured event.

Parametric natural disaster cover may also make sense in addition to or for the restructuring of property programmes, as these risks to individual exposed locations can be systematically “outsourced” and covered. High limits for individual locations and rapid compensation in the event of a loss that guarantee liquidity, can offer great added value in sectors such as Construction, Energy, Automotive, Transport & Logistics, among others.

Outlook: extending triggers

Despite the fact that the solution is typically applied to weather-related events (to improve resistance to climate risks), we are starting to discuss how we can also apply the principle of parametric insurance to other risks.

AI, IoT, sensors, automation. All these components generate so much data on all risks in all industries, from machine failures to business interruptions without physical damage, that it is only a question of time before an agreement is reached on triggers from sensor data for risks which go beyond weather events and natural disasters.

As long as we can ensure that data is collected objectively, independently and reliably, we can develop parametric insurance policies for many complex risk situations.
The future for parametric insurance policies is indeed bright and is continuously expanding with new data that can be collected and analysed systematically.

Tanja Dippel
Customer & Distribution
Manager Austria,
Swiss Re Corporate Solutions
T +49 89 38441024

Jan Bachmann
Head Innovative Risk Solutions
T +41 43 285 21 42

Martin Hotz
Head Parametric NatCat
T+41 43 285 68 57
Swiss Re Group

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Rudolf Schiel

Practice Leader Property & Engineering

T +43 664 822 27 58

Ain’t no sunshine

We are debunking four myths about parametric insurance for renewable energy

Parametric insurance has been around since 1990s although the reinsurance industry has been using the parametric structures with catastrophe bonds for more than 30 years. Back then it was considered a novel product, but it may now be reaching new levels of popularity with the renewable energy investors and producers due to rapid advancement of technology and increasing quality of data around the world. For example, insurance companies can now build better indices to approximate the yearly average energy production of a windfarm and the insured can protect his revenues using index based parametric insurance.

One of the key motivators for the companies to purchase such insurance is its efficiency. The wordings have only a few pages, the indemnity amounts are clearly defined and the Insureds avoid lengthy claims investigations, coverage disputes and payment delays.
Flexibility is also another important factor that contributes to the adoption of the product. All the parameters can be tailor made to perfectly suit the risk management objectives and the Insured is also free to use the payouts the way he likes, unlike traditional insurance. Basically, an index is triggered, payout is made – no questions asked.

Another key criteria is the reduction of volatility, hence, the predictability of future revenues, transparency and objectivity of underlying parameters by applying parametric insurance as a protection against weather underperformance.

Despite its efficiency and speed the use of the product has been limited, at best. We decided to investigate the intrinsic details of the coverage and debunk common myths associated with index-based insurance solutions for renewable energy sector.

Myth #1 – parametric insurance is not suited for SME and mid-corporate buyers

Although initially designed to transfer high and catastrophic risks on a country level especially in regions like Caribbean, advances in data science, sensor technology and artificial intelligence have allowed for the creation of a broader assortment of informational indexes. This opened the door to new applications for parametric insurance that go well beyond the traditional natural catastrophe uses. The payout schemes have evolved from the eye of a tornado going through a specific geographical circle through a modular payout based on the speed of wind at a precise location, ensuring incremental payouts according to the exact nature of the catastrophic event.

It is a common misconception that parametric insurance can replace the traditional indemnity-based insurance coverage. It is a complementary coverage and should be purchased together with the traditional property damage and business interruption policies.

Renewable energy industry is heavily dependent on the availability of the financing. Therefore, index-based insurance, also known as sun or wind resource volatility insurance, provides additional protection to the investors while it stabilizes the revenue streams and increases the risk rating of the project.

Project managers face a project risk transfer gap, which occurs between the contractual warranties and available insurance coverage. Whilst the traditional insurance contracts facilitate the transfer caused by man-made (machinery breakdown, fire etc.) and natural perils, parametric insurance is designed to transfer the weather underperformance risk where traditional policies apply exclusions or simply do not respond to specific adverse events such as insufficient or excess resource availability. According to GCube, the weather risk gap of insurance is estimated to reach over 56 billion USD.

Myth #2 – parametric insurance is complicated

Let’s start at the beginning. The Oxford Dictionary defines the adjective parametric as “relating to or expressed in terms of a parameter or parameters”. When applied to insurance, that means coverage is triggered by a parameter – i.e. a metric or an index – that is easy to determine. An insurable trigger needs to be fortuitous and insurers need to be able to model it. Parameter or index used for the basis of a parametric insurance solution must be objective (i.e. independently verifiable), transparent, and consistent. This is important for investors, as it eliminates the information asymmetry and the moral hazard.

Basis Risk
While parametric insurance has all the advantages of the cost-effective risk mitigation and transfer tool for renewable energy projects, it does have its shortcomings. This phenomenon is often referred to as Basis Risk. It is commonly considered as a “near-miss factor” or the event where the trigger index does not perfectly correlate with the underlying risk exposure, resulting in a situation where a policyholder suffers a loss but does not receive payment. For example, measured wind speed might fall within the insurable range, but the insured did not suffer loss of revenue below the pre-determined index, hence no payout.

Structured Index
When we speak about the sun or wind resource volatility index, we usually refer to the double-trigger policies, which require that a pre-determined parameter threshold is reached and the insured has sustained the actual financial loss, e.g. loss of revenue due to lack of wind.

The index is usually structured as a function of wind speed or solar irradiation level, and plant efficiency factor. The insured can choose the desired protection by defining the Strike, acting as a deductible, and the Exit point. The annual estimated energy production between the Strike and Exit represents the Total Sum Insured. The premium is consequent upon the wind speed historical volatility and the Strike and Exit scenario chosen by the client.

In case production energy production falls below a certain level, e.g. 98% (Strike), the payout is activated until the Exit scenario, e.g. 80%. The magnitude of the payout is determined by the actual loss of generation income for the plant. Hence, the index fluctuates, whereas the actual revenues remain almost constant. The volatility is reduced, and the project delivers revenue streams in accordance with the financing model.

Myth #3 – parametric insurance is expensive

Contrary to the common belief, parametric insurance is very cost-effective provided that correct index has been structured for the specific renewable energy type.

According to Modern Energy Management, the majority of renewable energy projects face significant cost overruns, which are mainly due to the failure to properly identify and transfer project risks. This creates often a huge gap in risk transfer, whereas the investors and lenders end up assuming greater project risk than they should. One of the main reasons is that the project contracts and insurance is often developed in isolation.

Parametric insurance reduces volatility of the projected income, thus enabling a steady, predictable stream of revenues that appeal to lenders and investors alike. Quite often it helps to reduce cost of capital by pushing the interest rates down and increasing the debt/equity ratio.

Investors must juggle with all the characteristics of the project to maximize the revenues generated from their investment. Vaisala has calculated that 33% of the total energy production uncertainty for a windfarm project comes from both the historical and the future wind resource variability. This is exactly what the index based parametric insurance is designed to mitigate.

For example, many solar farms secure their financing at P95 level, hence, leaving a 5% chance of not achieving the planned annual energy production. However, after reviewing over 200,000 solar farm projects, WindAnalytics has found out that the P99 radiance probability of a catastrophically bad year is not 1% as mathematically calculated but rather 6.3%. The consequence is that a project financed for 7 years with a loan size based on 1xP99 metric results has a 37% chance of defaulting in a given year.

Parametric insurance can appear costly when compared to the traditional indemnity-based insurance. The premium may range between 0,5% and 5% of the purchased limit, whereas the conventional policy will have a premium rate much lower than the index-based solution. Such comparison is not entirely correct. Property Damage and Business Interruption policies cover loss of or damage to insured property and the business interruption resulting therefrom. They require a physical loss or damage in order for the coverage to be triggered and have extensive list of warranties, subjectivities and exclusions incorporated in their wordings. Index-based policies, however, do not require a physical loss to reimburse the insured for the economic cost of the adverse event.

The index based parametric insurance can be structured in many different ways. The scenario, which involves a low Strike and high Exit, will result in minimum premium level. On the opposite, if the client choses a very high strike and a low exit, the expected premium will be a lot higher. The Insured will have received larger payouts. The product should be structured to match key project objectives, from securing the lenders and improving the credit rating of the project to reducing the volatility of future revenues to a minimum level.

Myth #4 – regulators do not approve parametric insurance as insurance

Insurers offering parametric insurance have to overcome the regulatory challenges. Those who are already offering such products usually use double trigger policies, which require the proof of loss by the insured even though both types of policies function similarly to derivatives. The main difference is the insurable interest, which derivatives lack. In certain countries, where the regulatory framework does not explicitly address the use of parametric, it is important that the indemnity payment does not exceed the actual sustained loss and that the insured can prove existence of the same.

One of the main issues regarding risk management in renewable energy projects is the confusion on how to best manage weather-related volume risks. In order to provide answers to this, insurance broker should be involved as early as the planning stage of the project, i.e. before the contract is drafted, negotiated and signed. Early involvement ensures the closing of the risk transfer gap and securing the best terms and conditions for the project`s finance. Parametric insurance can be tailored to match project of any size and budget.

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Zviadi Vardosanidze

Group Practice Leader Energy, Power and Mining

T +43 664 962 39 04