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.
Parametric products utilize advanced technology and satellite data to detect hail events, enabling underwriters to model hail risk more accurately. Equipped with a better understanding of a clients' exposure, a bespoke parametric cover is structured to address specific pain points within a given budget and pay out swiftly following a triggering event.
Key benefits
Transparency:
Third-party data is accessible to clients & brokers, providing added transparency through a straight-forward data-driven claims process
Client-customized:
Covers are structured to client specifications and can include large hailstone events, allowing for coverage outside of panel warranties
Precision:
Models identify where a potential hail threat is most significant at specific locations to underwrite the risk better
Data-driven:
Regardless of the location of a given solar farm or the existence of historical reports, hail risk exposure can be correctly assessed
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 change uncertainty rises and hail events intensify, these kinds of figures are expected to follow suit.
Parametric insurance products are an innovative solution 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 hail insurance
Descartes offers parametric insurance against hail damage, presenting an innovative risk transfer solution for the solar industry. This approach can complement or replace traditional insurance coverage, providing a viable option for solar plant owners and stakeholders seeking comprehensive and responsive coverage.
Gain insights into how parametric hail insurance protects renewable infrastructure assets against the full spectrum of financial losses due to hail, including non-damage revenue losses. And explore tailored insurance options with increased capacity and rapid payouts that offer buyers the confidence that their coverage will respond as intended.
case study example
Case study
Problem
A client experienced $25 million USD in damages following a severe hail storm that hit their solar power plant in Texas. Their traditional policy left the client with a challenging claims process leading to unfavorable terms at renewal.
Solution
At their next renewal the solar plant opted to carve out their hail exposure to a parametric cover which offered a more refined calculation of their hail risk and the benefit of a quick claims payout process
Result
Descartes was able to provide the client with a fully tailored structure that better met their needs in the event of a hail loss and the ability to avoid a lengthy claims settlement process.
The client would receive $25M USD
