Parametric Hail Insurance: An alternative Risk Transfer Solution for the Solar Industry

Solar plants across the US continue to take a hit from severe hail events

Across the United States, hailstorms are driving losses from South Dakota to Colorado. Meanwhile, solar plants are expanding rapidly in previously uninhabited parts of the country, particularly in hail-prone areas. This has led to a challenging insurance market, where reports of hail events in such locations have been largely insufficient for traditional underwriting. 

Texas leads the nation in terms of the number of solar farms per capita due to the number of days with sunlight and reduced project costs. As more developments occur in previously uninhabited areas, the solar industry in the state has been increasingly impacted by hail events, resulting in larger loss sums year after year. For example, a hailstorm that passed through West Texas in 2019 racked up to $70 million in losses alone. As climate uncertainty rises and hail events intensify, these kinds of figures are expected to follow suit. 

Traditional insurance for solar plants is often unavailable, unaffordable, or limited, as hail is deemed uninsurable by traditional underwriting methods. Parametric products are an innovative alternative for solar plants seeking efficient, customized coverage that comes with a swift payout, enabling solar clients, developers and investors to bounce back faster after an event. 

Descartes’ parametric insurance against hail damage offers an alternative risk transfer solution

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