The urgent shift to renewable energy driven by climate change is one of the biggest macroeconomic trends and opportunities of our generation, and climate insurance is playing a critical role. As the world grapples with an increase in climate disasters and resulting outsized losses, climate insurance has emerged as a new and critical sector of the insurance industry. 

Climate Insurance is a rapidly growing sector of the broader insurance market, and for good reason. Insurers, who are critical players in the energy transition, are recognizing the need to diversify energy exposure and protect their books against losses arising from a changing climate. In fact, Swiss Re's economics research group found that there will be $237bn of premiums associated with the shift to zero carbon generation between now and 2035.

Sound familiar? The cyber insurance market draws significant parallels to renewable energy insurance, as both are among the few classes growing double digits annually. When cyber losses began escalating, insurers quickly recognized the need for better and more data and specialized underwriting expertise for this new technology. The climate insurance industry is taking a page out of the cyber book and recognizing the specialty approach that solar, wind, and battery assets require. As the demand for clean energy generation and company ESG initiatives grows, data-driven climate insurance is going to be crucial on our path forward.

Insurers play a key role in the ongoing energy transition, as they have more access to data than nearly any other industry. Armed with the right technology, there’s an opportunity for insurers to use their data and expertise in forming an underwriting view unique to the climate sector, enable financing of critical renewable energy projects, and inform best practices among insureds. 

But insurers are just one piece of the puzzle. Successfully transitioning to a low-carbon future requires coordination among multiple stakeholders. Asset owners must continue deploying capital into renewable energy projects and work with developers to build resilient infrastructure. Robust insurance protection will make projects more bankable and accelerate development.

As trusted advisors, brokers will need to have in-depth knowledge across renewables sectors to educate clients on evolving climate risks and ensure policies adapt to asset portfolios.

Partnerships between brokers, insurers, and asset owners will enable seamless risk transfer and enhance underwriting capabilities. 

Natural disasters and extreme weather events are no longer isolated incidents or mere statistics. They are the harsh realities of a planet in peril, and the climate insurance segment has become truly necessary as we work urgently to transition to renewable energy and decarbonize the economy. Insurance will play a pivotal role in enabling the funding of renewable energy projects and protecting against potentially catastrophic climate impacts. But no single stakeholder can drive the momentum alone. Asset owners, insurers, brokers, and financial institutions must work together to develop specialty underwriting expertise, create innovative risk transfer solutions, improve resilience, and accelerate the renewable energy transition. The stakes could not be higher. Industry-wide collaboration is imperative as we build a sustainable energy future and fight the existential threat of climate change. The insurance industry has an obligation to lead the way with urgency, purpose, and collective action.