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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


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




Solar capacity has grown significantly between 2003 and 2012


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


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


Distribution of Claims Costs Germany 2003-2013

25%

19%

17%

11% 10%

7%

4% 3%

2% 2%

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.

Agenda




HR solution focuses on erection & operations


Overview Conceptual Components

2. Erection 1. Design &

Transport 3. Operations

Property Insurance

Business Interruption

Third Party Liability

+

Operational All Risk Cover 2


Property & Equipment

Erectional All Risk Cover 1

Output Performance 3




2. Erection 1. Design &

Transport


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)




1. Design &

Transport 3. Operations

Property Insurance

Business Interruption


+

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


Discussion

commercial rooftop solar - getting it right! - home - sapvia · we are among the top reinsurers in...

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