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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
3 Commercial Rooftop Solar - Getting it right!
Source: A.M. Best (September 2014)
1) Net premium earned
2) Reinsurance only
Premium ranking 2013 in m. USD
Rank Group Country GWP NPW
1 Munich Re DE 38,333 36,638
2 Swiss Re CH 32,934 30,478
3 Hannover Re DE 19,225 16,833
4 Lloyd's 2) 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
1)
1)
Hannover Re Africa Who we are
4 Commercial Rooftop Solar - Getting it right!
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
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
10 Commercial Rooftop Solar - Getting it right!
Overview installed capacity (in MWp) 2000-2014 in Germany
First wave of claims 2003-2006 - roughly 40% attributable to mismanagement
First claims
wave
Reduction of
new capacity in
2013 due to
subsidy cuts
42 78 118 139
670 951 843
1.271
1.809
3.806
7.408 7.500 7.600
3.303
1.015
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Solar boom also had negative effects for insurers
11 Commercial Rooftop Solar - Getting it right!
Key Facts Solar Insurance Germany
Insurers are waking up and verifying their U/W strategies in solar
► 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
Main claims drivers with 44% of costs are storm and lightening
12 Commercial Rooftop Solar - Getting it right!
Distribution of Claims Costs Germany 2003-2013
25%
19%
17%
11% 10%
7%
4% 3%
2% 2%
Ensuring sustainable managment of PV-systems
13 Commercial Rooftop Solar - Getting it right!
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.
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
17 Commercial Rooftop Solar - Getting it right!
Overview Conceptual Components
2. Erection 1. Design &
Transport 3. Operations
Property Insurance
Business Interruption
Third Party Liability
+
Operational All Risk Cover 2
Third Party Liability
Property & Equipment
Erectional All Risk Cover 1
Output Performance 3
HR solution focuses on erection & operations
19 Commercial Rooftop Solar - Getting it right!
Overview Conceptual Components
2. Erection 1. Design &
Transport
Third Party Liability
Property & Equipment
Erectional All Risk Cover 1
Offering a comprehensive package for the whole solar plant
Erectional Phase (during first 4-6 months) - At a glance
20
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)
HR solution focuses on erection & operations
21 Commercial Rooftop Solar - Getting it right!
Overview Conceptual Components
1. Design &
Transport 3. Operations
Property Insurance
Business Interruption
Third Party Liability
+
Operational All Risk Cover 2
Output Performance 3
Operational Phase Insurance - At a glance
22
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
Performance Guarantee Insurance - At a glance
29
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
32 Commercial Rooftop Solar - Getting it right!
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