McGill develops bespoke offshore cat models

McGill and Partners has collaborated with risk analytics specialist Renew Risk to develop catastrophe models for offshore wind portfolios.

The broker said the move comes in response to an increasing demand for in- depth catastrophe modelling for offshore wind projects venturing further into high-risk areas. 

It added that robust models will help the market better understand and quantify the risk, determine appropriate (re)insurance limits and understand aggregation across multiple windfarms in one region.

This, it added, will lead to increased insurance capacity available for the benefit of the developer, enabling (re)insurers to offer more competitive and sustainable products, and reduce their own capital requirements and volatility.

Renew Risk built an initial five models using the Oasis framework, an open-source cat model platform, covering Northeast US hurricane, Taiwan earthquake and typhoon and Japan earthquake and typhoon.  These models will assist in providing McGill and Partners with a fuller understanding of the natural peril risks, determining appropriate insurance limits, and grasp of risk aggregation across multiple windfarms in one region.

Tom Sexton, partner and head of Renewables, Power and Energy at McGill and Partners said: “There has been a pressing need for a custom-built offshore wind catastrophe model to accurately assess the probability of loss for this rapidly developing asset class in high-risk zones. These models will assist both offshore wind clients and insurers to access more efficient risk transfer capital.”

“They will enable insurers and reinsurers to price coverage more accurately, understand asset class aggregations, and assess offshore wind’s impact on other lines of business – previously inaccessible insights. This will give insurers and reinsurers the confidence to provide greater capacity at more appropriate pricing levels to our offshore wind clients in high catastrophe zones.”

Dr Catherine Tillyard, partner in Treaty Reinsurance at McGill and Partners added: “McGill and Partners is also part of the Sustainable Markets Initiative, something we’re immensely proud of and that shapes how we look to develop our business. Without sufficient insurance, offshore developers are unable to access credit for these large-scale projects.  These catastrophe models provide all parties with a more accurate assessment of the risk, enabling such projects to become a reality – crucial if we are to transition to renewable energy sources.”