The new market insights report from GCube Insurance, draws on its global claims database. Key findings from the report include:
US: Hail and wildfire losses are rising, with some natural catastrophe events exceeding $300 million in insured damages. The tightening of coverage limits, and rising deductibles is adding further pressure on project owners and financiers.
Europe: This region can no longer be considered a lower-risk renewables market. In 2024, Europe faced unprecedented renewables asset losses from natural catastrophes and extreme weather, alongside its second-costliest year for flood damages - leading to a rise in the frequency and severity of claims across the continent.
Middle East: Previously considered a ‘benign’ market for extreme weather, MENA renewables now face growing climate risks. As these risks escalate, insurers must rethink exposure, and the renewables industry must move beyond short-term fixes and begin to address the underlying vulnerabilities of its projects.
Australia: Losses to renewables from extreme weather fortunately remain low, but the current rapid expansion into new regions increases exposure to bushfires, cyclones, and hailstorms.
“For years, the US has been at the frontline of the renewable energy market’s battle with Nat Cat [natural catastrophe] and extreme weather risk” said Fraser McLachlan, CEO of GCube Insurance. “But while North America has long been the focal point of these challenges, it is now evident that this has become a global issue. Across Europe, the Middle East, and Australia, the renewables sector recognises the increasing climate-driven risks, but, due to modelling and data shortfalls, the full scale and complexity of those risks remain unclear.”
The report also highlights that natural catastrophe and extreme weather risks are increasingly impacting project bankability, particularly in the US, where some developments are struggling to secure financing due to coverage gaps and rising costs.
Cécile Luciano, Director of Structured Finance Energy Origination at NORD/LB, who contributed to the report, added that the changes have not yet made projects ‘unbankable’ but real challenges have been encountered.
““For example, I’ve seen a project in a flood-prone area where the insurance policy excluded flooding entirely. That’s not something we can accept, forcing developers to find coverage elsewhere, often in a different market. We are seeing more engagement between lenders, insurance advisors, brokers, and developers to ensure that policies are bankable from the start. This needs to happen early in the process, ideally before construction insurance is finalised.”
The report calls for action from insurers, developers, and financiers to close the global renewables risk management gap. This will involve enhancing data accuracy through updated natural catastrophe modelling, optimising asset design to withstand emerging weather threats, and strengthening resilience strategies through closer collaboration between insurers and financiers to maintain long-term insurability and effective risk-sharing.
With renewables markets worldwide experiencing unprecedented expansion, Known Unknowns serves as a timely warning that unchecked exposure to natural catastrophes and extreme weather could derail the energy transition. Adapting to these risks is no longer optional – it is essential for the sector’s future security.
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