GCube Insurance is urging insurers, developers, and financiers to address critical risk management gaps in renewable energy projects, warning that exposure to severe weather events is threatening the financial viability and insurability of new developments.
While natural catastrophe losses for renewable projects in Australia remain relatively low, GCube noted that the rapid geographic expansion of the sector is increasing vulnerability to bushfires, cyclones, and hailstorms. These escalating risks are impacting project bankability, with some developers struggling to secure funding due to insurance coverage gaps and rising premium costs.
“Severe risks have greatly impacted project bankability,” the report stated, highlighting that insurance exclusions are sometimes misaligned with project realities. For instance, a recent development in a flood-prone area faced difficulties obtaining financing after its insurance policy excluded flood coverage entirely.
“That’s not something we can accept,” said Cécile Luciano, Director of Structured Finance Energy Origination at NORD/LB. “It forced developers to seek coverage in alternative markets, which can delay projects or make them unfeasible.”
Luciano emphasized the importance of early collaboration between stakeholders. “We are seeing more engagement between lenders, insurance advisors, brokers, and developers to ensure policies are bankable from the start. This needs to happen early in the process—ideally before construction insurance is finalized.”
In its latest report, GCube stressed the need for a coordinated approach to close the renewables risk gap. The insurer recommended several key strategies, including improving the accuracy of natural catastrophe modelling, optimizing asset design to withstand extreme weather conditions, and fostering stronger collaboration between insurers and financial institutions.
“These efforts are vital to maintain long-term insurability and promote effective risk-sharing,” GCube stated.
As global investment in renewable energy accelerates, the insurance industry’s role in supporting sustainable development is becoming increasingly critical. GCube’s call to action highlights the urgency of adapting risk management frameworks to keep pace with the changing climate and the evolving energy landscape.
Related topic:
China Turns to Insurance Giants to Calm Markets Amid Trump’s Tariff Threats
Israeli Exporters Rush for State Insurance Amid Trump Tariff Turmoil
ClearView Strengthens Position with Strategic Focus on Core Life Insurance
