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Taiwan Offshore Wind Seminar October 2021
Current trends and future challenges in the offshore wind insurance market
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Presenter
Tom Sexton, Partner at McGill and Partners
Tom has been an insurance broker for 30 years and has been providing risk advisory and insurance broking services to the offshore wind sector since 1998.
Tom has placed more than 50 offshore wind farms into the international insurance market from all around the world.
Tom leads a specialist offshore wind team at McGill and Partners consisting of hand-picked experts from across the industry.
Tom.Sexton@mcgillpartners.com
McGill and Partners is a boutique specialist insurance broker focused on clients with complex and challenging needs. We believe specialty
placements in today’s rapidly changing market need true expertise, deep relationships and a genuinely fresh perspective.
Our history
The company was founded in May 2019, following the backing of up to $250m of equity
commitment from funds affiliated with Warburg Pincus. This significant backing and partnership has resulted in dramatic growth driven by a progressive talent acquisition strategy.
We believe that an open, aligned and progressive insurance market benefits everyone.
Our role as brokers is to create specialist transactions that help our clients achieve their strategic goals through effective transfer of risk.
Our focus
We primarily focus on clients with complex and/or challenging needs, combining true expertise with a fresh perspective. Currently, our core areas of expertise are across: Complex Property &
Casualty, Marine & Cargo, Aviation & Aerospace, Renewables, Power & Energy, Financial Lines & Special Risks, Structured Solutions and Reinsurance.
What makes us different
_ A boutique (re)insurance broker, focused on clients with complex and/or challenging needs
_ Practitioner driven - Strong broking experience, relationships and industry expertise
_ Single profit centre philosophy which
eliminates silos and reinforces teamwork _ A unique culture based on trust, diversity
and performance
_ Cloud-based infrastructure and no legacy systems
About McGill and Partners
Taiwan
We work closely with our experienced partner, Alexander Leed, to provide our offshore wind clients a focused and specialist level of service in Taiwan.
Current trends in offshore wind
insurance
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1. Reducing availability & increasing cost of Natural Catastrophe cover
• In Taiwan there will be a requirement for billions of dollars of Natural Catastrophe insurance (earthquake and typhoon)
• This capacity is already becoming a scarce commodity
• Each project to date has bought consecutively less cover for more premium
• This trend will continue unless new capacity can be enticed into the sector
CAT limit as a percentage of Total Insured Value
2. Ongoing subsea cable challenges
• Cable Protection System
problems an industry wide issue that may affect a
number of assets
• Also concerns around
terminations of inter-array cables
• Impacting insurance terms and conditions
• Increased requirement for technical broking
Buried Cable Inside tower Foundation
transition Scour section Seabed transition
Bend restrictor
Scour protection CPS interface
Scour transition
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3. Auctions and the “race to the bottom”
• Licence “auctions” common in the sector
• Continuing pressure to reduce costs
• Is there a link between cost saving measures and claims?
• At the same time repairs are increasing in cost
• Insurers are concerned and this is being reflected in insurance terms and
conditions
4. Current insurance market trends
Hardening terms and conditions:
• Design cover restrictions
• The application of the Series Loss clause is changing
• Scrutiny on the extent of maintenance cover
• A more onerous Marine Warranty Surveyor clause
• Higher deductibles (subsea cables in particular)
• Higher premium rates
Period of change among insurers:
• New insurers entering the sector
• Many following their clients from the Oil & Gas sector
• Insurers are competing for underwriting talent
• Need to harness their capacity without
losing vital cover
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Future challenges
1. Continued growth but in new territories
• Major offshore wind countries to date includes:
UK, France, Germany, Denmark, Belgium,
Netherlands, Sweden, Portugal, Taiwan, Japan and China
• Major offshore wind countries new growth includes:
Ireland, Italy, Poland, Japan, South Korea, Vietnam, US and Brazil
• Experience
• Local infrastructure
• Local content
• Local regulations
• Nat Cat exposures
• Supply chain risks
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2. Scale and complexity increasing
• Turbines are increasing in scale and cost
• Projects are going further offshore
• Deeper water
• Evolving foundation designs to cater for site specific challenges
• All leading to more challenging and expensive vessel
requirements
• Starting to see a tightening in supply chains
• Escalating costs to repair and replace damaged assets
Seagreen Jackets – Courtesy of SSE Renewables GE Haliade X – 14MW Nacelle
3. Commercialisation of floating technologies
Hywind Scotland - Equinor Windfloat Atlantic
