New catastrophe models to help insurers assess risk and support growth of offshore wind

As offshore wind projects venture into high-risk areas, the demand for in-depth catastrophe modelling has surged. McGill and Partners and Renew Risk are developing robust models to meet this demand and enhance risk assessment, insurance limits, and aggregation.

The models will empower insurers to offer more competitive and sustainable products while reducing their capital requirements and volatility.

Renew Risk has developed five catastrophe models in the Oasis framework, covering Northeast US hurricanes, Taiwan earthquakes and typhoons, and Japanese earthquakes and typhoons. These models will give McGill and Partners a comprehensive understanding of natural peril risks, insurance limits, and risk aggregation dynamics among wind farms in a single region.

Tom Sexton, partner and head of renewables, power, and energy at McGill and Partners, stressed the importance of custom-built catastrophe models for offshore wind. He noted: “There is a pressing need for such models to accurately assess the risk of loss for this rapidly developing asset class in high-risk areas.”

Sexton also highlighted that these models would enable insurers and reinsurers to offer more accurate pricing, understand risk aggregations, and assess the broader impact of offshore wind on other lines of business.

Ashima Gupta, chief executive officer at Renew Risk, underscored the pivotal role of offshore wind in the transition to renewable energy. Gupta noted: “With our data science-driven risk models, we can enable our clients to thoroughly assess the intricate risks associated with natural disasters.”

The bespoke catastrophe models developed by McGill and Partners and Renew Risk will play a vital role in enabling this transition by empowering insurers to offer competitive and sustainable products, reducing risk, and boosting confidence in offshore wind projects.