{"id":16620,"date":"2024-06-17T10:22:37","date_gmt":"2024-06-17T10:22:37","guid":{"rendered":"https:\/\/iqeq.com\/?p=16620"},"modified":"2024-06-17T10:26:46","modified_gmt":"2024-06-17T10:26:46","slug":"how-captive-insurance-is-helping-the-renewable-energy-industry-grow","status":"publish","type":"post","link":"https:\/\/iqeq.com\/insights\/how-captive-insurance-is-helping-the-renewable-energy-industry-grow\/","title":{"rendered":"How captive insurance is helping the renewable energy industry grow"},"content":{"rendered":"
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As the world looks toward upcoming Net Zero targets, ESG considerations are increasingly prevalent across industries, particularly the energy sector. In this time of transition toward cleaner sources of energy, captive insurance is emerging as a significant facilitator of the industry\u2019s growth and a solution to this new risk base.<\/strong><\/p>\n

The energy industry has a complex risk landscape, with considerations ranging from property damage to major weather events and environmental liabilities. As commercial insurance carriers struggle to address the unique risks of renewables, captive insurance solutions have emerged as a preferred alternative.<\/p>\n

In this post, we\u2019ll explore the growing importance of captive insurance in the renewable energy sector, trends to look out for, and how to use captives to your advantage.<\/p>\n

What is captive insurance?<\/h2>\n

Captive insurance dates back to the early 1960s, when regulated self-insurance emerged as a way to reduce reliance on commercial insurance, which was both expensive and reluctant to cover certain types of risk.<\/p>\n

A captive is an alternative risk transfer (ART)<\/a> solution in the form of self-insurance, where a company creates its own insurance entity to manage its risks. This approach allows for greater control, customised coverage, and often significant cost savings over traditional insurance solutions.<\/p>\n

While captive insurance is not new, conventional insurance products are often reluctant to cover the complex risks of emerging industries with limited risk histories\u2014such as renewables\u2014which has made captives a particularly beneficial partner in renewable growth.<\/p>\n

The shift toward captive insurance for renewables<\/h2>\n

Renewable energy businesses and contractors grapple with significant risks, many of which are excluded from commercial insurance coverage. If coverage does exist, it\u2019s often prohibitively expensive, leaving fewer resources for critical activities like research and development.<\/p>\n

Increasingly, renewable energy businesses are using captives to insure themselves against sector-specific exposures such as seepage, contamination, or regulatory changes.<\/p>\n

Several factors have driven the move toward captive insurance as a preferred option:<\/p>\n