Commercial Rooftop Solar - Getting it right! Relevance of (technical) risk for insurance & innovative product solutions Randolph Moses Oliver Straubenmueller Malte Johannes Workshop PV in South Africa Johannesburg, 23 July 2015
Agenda Introduction Hannover Re – a global reinsurer Learning from experience: Relevance of (technical) risk in insurance Designing innovative product solutions for Commercial Rooftop Solar
We are among the top reinsurers in the world Premium ranking 2013 in m. USD Rank Group Country GWP NPW 1) 1 Munich Re DE 38,333 36,638 2 Swiss Re CH 32,934 30,478 1) 3 Hannover Re DE 19,225 16,833 Lloyd's 2) 4 UK 15,614 11,329 5 SCOR FR 14,116 12,570 6 Berkshire Hathaway Inc. US 12,776 12,776 7 RGA US 8,573 8,254 8 China Re CN 7,936 7,523 9 Korean Re KR 5,623 3,635 10 PartnerRe BM 5,562 5,391 11 Everest Re BM 5,219 5,005 12 Great West Lifeco CA 4,206 4,089 13 Transatlantic Holdings US 3,423 3,248 14 MAPFRE RE ES 2,524 2,227 15 General Insurance Corporation of India IN 2,377 2,139 Source: A.M. Best (September 2014) 1) Net premium earned 2) Reinsurance only 3 Commercial Rooftop Solar - Getting it right!
Hannover Re Africa Who we are 100 % subsidiary of Hannover Rück SE Trading in South Africa since 1953 Property & Casualty and Life Reinsurer Business model includes Agency shareholding through Lireas and Compass Insurance company (100% owned) High level of autonomy and local underwriting mandate Access to a global pool of skills 4 Commercial Rooftop Solar - Getting it right!
Agenda Introduction Hannover Re – a global reinsurer Learning from experience: Relevance of (technical) risk in insurance Designing innovative product solutions for Commercial Rooftop Solar
Solar capacity has grown significantly between 2003 and 2012 Overview installed capacity (in MWp) 2000-2014 in Germany 7.600 7.500 7.408 Reduction of new capacity in 2013 due to subsidy cuts First claims 3.806 wave 3.303 1.809 1.271 1.015 951 843 670 139 118 78 42 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 First wave of claims 2003-2006 - roughly 40% attributable to mismanagement 10 Commercial Rooftop Solar - Getting it right!
Solar boom also had negative effects for insurers Key Facts Solar Insurance Germany ► 1.4 million installed PV facilities in Germany (End 2013) 30% thereof have an operating time > 5 years 0,1% have a an operating time of >= 20 years 60% were erected during a period of relentless growth ► Estimated 700,000 PV facilities have been declared deficient: for instance statics, laying of cables or missing project documentation ► 40% of the installers have exited the market (estimate) ► 70% of the PV facilities never encounter a professional review again Insurers are waking up and verifying their U/W strategies in solar 11 Commercial Rooftop Solar - Getting it right!
Main claims drivers with 44% of costs are storm and lightening Distribution of Claims Costs Germany 2003-2013 25% 19% 17% 11% 10% 7% 4% 3% 2% 2% 12 Commercial Rooftop Solar - Getting it right!
Ensuring sustainable managment of PV-systems Success factors in managing in force solar portfolio ► Ensuring sustainable facility operations via qualified maintenance Certification if third party systems including the removal of deficiencies Regular check of the complete facility (revision of electrical appliances, monitoring of roof, statics and others) Event related check of high risk systems and perhaps also in case of extraordinary events ► Extension of Service Contracts provides great advantage for surviving market players to attract more business by: offering a wider array of services for self installed systems and also for abandoned facilities due to bankruptcy, sales etc. 13 Commercial Rooftop Solar - Getting it right!
Agenda Introduction Hannover Re – a global reinsurer Learning from experience: Relevance of (technical) risk in insurance Designing innovative product solutions for Commercial Rooftop Solar
HR solution focuses on erection & operations Overview Conceptual Components 1. Design & 2. Erection 3. Operations Transport 1 2 Erectional All Risk Cover Operational All Risk Cover Third Party Liability Property Insurance Property & Equipment Business Interruption Third Party Liability + 3 Output Performance 17 Commercial Rooftop Solar - Getting it right!
HR solution focuses on erection & operations Overview Conceptual Components 1. Design & 2. Erection Transport 1 Erectional All Risk Cover Third Party Liability Property & Equipment Offering a comprehensive package for the whole solar plant 19 Commercial Rooftop Solar - Getting it right!
Erectional Phase (during first 4-6 months) - At a glance Insured: Contractor and/or Project owner Covered Risks : „All Risk Cover“ Cover of all unforseen loss due to damage or destruction (i.e. Fire*, lightning strike, explosion, testing & commission, natural events such as storms, earthquake, lightning, hail, snow load, frost, theft by outside parties, sabotage, Operator control error, accidental damage, negligence and execution faults, Force majeure, impact damage) Covered Components : all (i.e. installer equipment, Solar modules, Inverters, Substructure, Instrumentation and control components, Power supply and draw meters) 20
HR solution focuses on erection & operations Overview Conceptual Components 1. Design & 3. Operations Transport 2 Operational All Risk Cover Property Insurance Business Interruption Third Party Liability + 3 Output Performance 21 Commercial Rooftop Solar - Getting it right!
Operational Phase Insurance - At a glance Insured: Project/asset owner Covered Risks: „All Risk Cover“ Cover of all unforseen loss due to damage or destruction (i.e. Fire*, lightning strike, explosion, Natural events such as storms, lightning, hail, snow load, frost, Electrical short ‐ circuit, voltage surge, burglary, sabotage, vandalism Operator control error, accidental damage, negligence, material, design and execution faults, Force majeure) Covered Components: all (i.e. Solar modules, Inverters, substructure, Instrumentation and control components, Power supply and draw meters) Obligation in order to get cover: • PV-modules from accredited manufacturers • Commissioning certificate from accredited third party 22
Performance Guarantee Insurance - At a glance Insured: Contractor or Project Owner Covered Risks: Underperformance of the PV installation Obligations/prerequisite: - Commissioning certificate from accredited third party - Yield assesment through specially educated staff with standardized software Highlights: 5 year contract without cancellation right of the insurer in cases of a claim, optional prolongation for further 5 years 29
Discussion 32 Commercial Rooftop Solar - Getting it right!
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