Hydro Insurance Market Update€¦ · • HSB withdrew from the hydro market in late 2017 • CNA...

Hydro Insurance Market UpdateHydro Insurance Market UpdateHydro Insurance Market UpdateHydro Insurance Market Update

BHA Annual Conference 13BHA Annual Conference 13BHA Annual Conference 13BHA Annual Conference 13thththth & 14& 14& 14& 14thththth November 2019November 2019November 2019November 2019

About Us

• The largest independent Insurance Broker in Scotland

• Offices in Edinburgh, Glasgow, Galashiels, Turriff & London

• Renewable Energy team of 15 employees

• Bespoke insurance policy wordings adopted by leading insurers

• Over 100 hydro schemes insured ranging from 100kW to 5MW

Claims Analysis As At Nov 2018

• 20 claims over £20,000 in the past 3 years

• Total cost of claims £1,500,000

• 75% of claims value relates to loss of income

• Only 2 out of 20 claims were construction phase claims

• 14 out of 20 claims were for electrical of mechanical breakdown

Claims Analysis As At Nov 2018

• Most common breakdowns were:

oGenerator windings or bearings damage

o Turbine runner damage

o Transformer damage

• No common generator manufacturer

• No common turbine manufacturer

• 2/3rds of claims were from hydro schemes built since 2015

Claims Examples

Generator windings insulation failure £100,000

Claims Examples

Generator bearing damage £200,000

Claims Examples

Generator stator damage £150,000

Claims Analysis As At Nov 2019

• 7 further claims over £20,000 in the past year

• All operational projects 100kW-500kW generating capacity

• Total paid & outstanding cost of claims is £600,000

• 6 claims were for electrical or mechanical breakdown

• Average material damage/business interruption premium £2,000-£7,000

Insurer Market Position

• HSB withdrew from the hydro market in late 2017

• CNA are withdrawing from renewable energy market from January 2020

• RSA are withdrawing from renewable energy market in Europe (excluding GB and NI, but including ROI)

• Only 3 core insurers remain with a further 3 with limited appetite for hydro

• Need to address disparity between premium income and claims

Insurer Market Position Cont.

• Premiums have been increased

• Excesses have been increased

• Risk capacity has reduced

• More detail required on O&M arrangements

Operation & Maintenance

Insurers require hydro scheme owners to have:

“A formal maintenance agreement with the manufacturer or specialist company working to the manufacturers recommendations”

Operation & Maintenance Cont.

Annual maintenance to include:

• Internal inspection of the turbine

• Inspection of all other equipment including generators, actuators, MIV, control panel

• Interim inspection after 6 months

RECORD ALL MAINTENANCE CARRIED OUT

Operation & Maintenance Cont.

In addition:

• 24/7 maintenance contractor response preferable

• Remote monitoring

• Regular checks of powerhouse

• Keep combustible materials to a minimum in the powerhouse

• Keep moisture & dust levels to a minimum in the powerhouse

• Fire extinguishers in the powerhouse

Operation & Maintenance Cont. –Health & Safety

• Often lone worker in remote locations responsible for routine maintenance

• Intakes & powerhouses main areas of risk

• Safe area of work considerations:

o safety lines & harnesses or extendable brushes at intake

o first aid kit, ear defenders

o radio equipment

• Who is picking up the Employers’ Liability risk?

Operation & Maintenance Cont.

• Benefits:

• Will make your hydro scheme more attractive to insurers in general

• Breakdown cover will be provided, which is the most likely source of a claim

• Improve performance

• Helps reduce downtime

• Increase longevity

The Future?

• Encourage cohesive support within hydro sector to reducing losses

• Hydro is still within the remaining insurers appetite

• Insurers are looking to increase their hydro portfolio…......for now

• We want to avoid another small wind turbine scenario

Stuart MacLeod, Account ExecutiveStuart MacLeod, Account ExecutiveStuart MacLeod, Account ExecutiveStuart MacLeod, Account Executive

T: 0131 561 2418 / 07940 837526T: 0131 561 2418 / 07940 837526T: 0131 561 2418 / 07940 837526T: 0131 561 2418 / 07940 837526

E: stuart.macleod@brucestevenson.co.ukE: stuart.macleod@brucestevenson.co.ukE: stuart.macleod@brucestevenson.co.ukE: stuart.macleod@brucestevenson.co.uk