Aviva has begun insuring offshore wind projects and is running a pilot program to cover sustainable building materials such as engineered wood, as the FTSE 100 insurer reshapes its underwriting book to meet its climate ambitions.
The insurance group, which stopped insuring fossil fuel power generation projects four years ago, has been increasing its portfolio of renewable energy insurance in areas such as onshore wind, solar power and battery storage, with the aim of to be the number one renewable energy insurer by 2027. Last year it began to cover electric vehicle charging points.
Adam Winslow, head of Aviva’s UK and Ireland P&C business, said individuals, companies and countries “all have their part to play” in the transition to a climate-friendly economy.
“If we’re not covering the transition, if we’re not helping cover renewable energy sources as the power grid changes, we’re not doing a good enough job,” he added.
Aviva now offers construction and operational risks for offshore wind on the London Insurance Market, a hub for specialist insurance, writing on what is called a “follow-on” basis where it adds insurance capacity behind a leading insurer. Aviva has already secured its first client in the North Sea and plans to expand its underwriting team behind the broader effort.
Depending on upcoming projects, the European offshore wind market could generate $2-3 billion in gross written premiums by 2030, the insurer estimates.
Aviva is separately running a pilot project to secure so-called hybrid buildings, which use more sustainable materials, such as engineered wood, both in the construction phase and once built. Insurers often avoid materials like wood because of the risk of fire.
“We are working on a test-and-learn basis with a select handful of developers and intermediaries, who understand and will invest in the long-term sustainability and resilience of a building and accept the need for risk management in the design phase.” Winslow said.
He said the industry had a responsibility to “apply its risk management expertise to a whole new set of challenges we are facing due to the impact of climate change.” Aviva has previously called for more testing and awareness of new building materials in homes and offices.
Like other diversified insurance groups, Aviva has already funneled investor money into renewable projects through its asset management arm. Last year, the FT revealed that the insurer was also exploring investing its own balance sheet capital in climate-friendly projects.
Moving away from carbon-intensive sectors on their underwriting books has been a slower process for companies, but easier for those without a historical bias toward niche business risks.
Aviva said that the renewable energy businesses and projects it underwrites were the equivalent of 31.5 million tons of carbon dioxide each year, and that this business was already more than double the size of the fossil fuel book that was unraveled four years ago. years.
The insurer, which aims to reach net-zero carbon footprint by 2040, previously acknowledged that it has assets and business relationships associated with “significant emissions” but is reviewing these deals in order to meet its target.