Rewarding Resilience: How Insurers are Incentivizing Risk Mitigation

Originally published in Canadian Underwriter

Climate change is shifting the risk landscape, prompting a reevaluation of how renewable energy infrastructure is protected. And insurers play a key role in making the industries they serve more resilient to increasingly volatile weather and natural disasters.

Amid rising premiums and declining capacity, asset owners are adopting resilience measures to ensure long-term viability. Beyond imposing coverage restrictions, specialty insurers are evolving into strategic risk management partners. And, when company owners make documented investments to protect physical assets and enhance operational protocols, insurers should reward them with reduced premiums.

Renewable energy illustrates the benefits of incentivizing resilience. As public demand for energy increases, renewables have become increasingly crucial to the energy infrastructure. Yet, these assets are especially vulnerable to worsening natural disasters.

Record losses have caused some carriers to retreat from this market, tightening capacity that is vital for helping investors, developers, and communities manage the growing risks posed by these hazards, especially in the renewable energy sector.

As it rapidly expands, renewable energy is becoming a unique asset class. Solar, wind and battery assets are typically built where large amounts of land are available, often in regions predisposed to hail, hurricanes and high winds.

Insuring renewable energy requires specialized data and underwriting skills. Solar and wind projects feature multiple moving parts that, unlike traditional coal and natural gas plants, are constantly exposed to the elements.

Therefore, knowledge gained from other energy sectors can’t be directly applied. Plus, amid evolving geographic risks, historical data is insufficient. Rapidly changing technology and the lack of consistent global data collection add to this complexity, hindering the ability to accurately assess risk.

Multiple high-profile hail losses have particularly impacted solar asset owners and developers. Our 2025 Solar Risk Assessment reveals that 73% of solar insurance losses, by dollar value, are attributed to hail damage alone. These losses have reverberated throughout the renewable energy industry’s supply chain, negatively impacting coverage availability and terms for all asset owners and developers, not just those who have suffered losses.

The International Energy Agency predicts solar generation is set to quadruple by 2030. Further, the agency expects solar energy to become the world’s largest source of electricity by 2033, with wind energy growth trailing closely behind. Battery energy storage systems are expected to keep pace to ensure grid stability.

For renewable energy assets to be insurable, they must be resilient to worsening perils. Insurance carriers and brokers are helping move the renewable energy sector toward protective resilience by conducting their own research, collecting data, and giving actionable feedback regarding the design, construction and maintenance of the most resilient renewable energy assets. For example, when it comes to protecting against hailstorm damage, insurers should require solar asset owners and developers to implement, test and document mitigation measures, such as:

• investing in thicker, tempered glass modules less prone to cracking

• double-checking weather alerts

• implementing automated hail stow, which tilts panels to lessen hail and wind damage.

Implementing resilience measures and protocols early and frequently can mean the difference between little to no damage from a storm and a total loss event.

Battery storage assets must also be protected. Rapid evolution of battery technology requires owners and insurers to understand and implement necessary resilience measures, such as spacing battery assets farther apart to mitigate fire risk, and taking precautionary measures to detect and prevent flooding.

Protected assets have a different risk profile; therefore, they should command favorable terms such as lower premiums. Insurers shouldn’t only require resiliency measures but reward them. This means taking documented mitigation practices into account when analyzing renewable asset owners’ loss risks.

Akin to a ‘safe-driver discount,’ rewarding mitigation efforts incentivizes favourable behaviors by encouraging renewable energy owners to prioritize safety. This in turn contributes to a more insurable renewable energy sector.

For example, one North American utility-scale solar developer recently implemented comprehensive hardening measures for their 140-megawatt, $100-million project in a highrisk hail zone. The developer invested in 3.2 mm tempered glass panels, verified 53-degree hail stow protocols, and maintained detailed documentation of proactive stowing for more than 90% of past hail events.

By providing thorough evidence of these resilience measures, including photographic proof and operational logs, the developer secured a 72% reduction in their natural catastrophe insurance rate. To assess and reward risk mitigation, insurers need to take a comprehensive view of risk rather than relying solely on prior loss history.

Doing so requires expertise, data and a strong partnership with asset owners and developers. Accurate underwriting relies on physics models that account for real-time forecasts, long-term climate projections and detailed loss data. It also relies on close collaboration between insurers, and renewable energy asset owners and developers to share best practices and documented resilience strategies. Information-sharing is an important part of helping underwriters better understand a project’s risk profile.

Insurers should reward renewable asset owners who use resiliency measures proven to prevent damage due to natural catastrophes. Rewarding resilience encourages renewable energy owners to prioritize risk management, strengthening sector stability and insurability, while driving continued growth and innovation.