• In its new report, 'A turning point for offshore wind', Allianz Commercial highlights growth opportunities, tech innovations, risk trends, and loss patterns for the global industry.
• Damage to cables is the top cause of insurance claims, followed by turbine failure.
• Speed of build-out is creating pressure on materials and supply chains, port infrastructure, and available construction and maintenance vessels.
• Bigger turbines and new technology drive bigger exposures for insurers which need to be understood in partnership with developers.
• Weather and natural catastrophe risks are increasing as sector expands into new territories.

SINGAPORE - Media OutReach - 21 September 2023 - The potential of offshore wind as a viable source of clean power for the energy transition is indisputable. Investment in the sector is growing rapidly around the world, the power capacity of installations is ramping up, and technological innovations are proliferating – from multi-purpose windfarms and floating installations to next-generation connectivity and drone-based maintenance. Developers and their insurers need to manage a range of risks to successfully scale offshore wind globally, among them prototypical technology, economic pressures, more extreme weather conditions, cable damage, and collision perils, as well as environmental concerns. In its new report, A turning point for offshore wind, Allianz Commercial, as a leading insurer of renewable energy and low-carbon technology solutions, highlights growth opportunities, tech innovations, risk trends, and loss patterns for the offshore wind industry as the sector prepares for global growth. "Offshore wind farms are highly complex projects," says Anthony Vassallo, Global Head of Natural Resources, Allianz Commercial. "The lessons learned from past losses – which are primarily damage to cables and turbines – are essential for the industry to continue to grow sustainably. Emerging risks need to be explored, too, as developers prepare for widescale deployment of offshore wind around the globe. The size of turbines is ever increasing, wind farms are moving further out into harsher marine environments where they are more exposed to extreme weather, and technological innovation is constantly progressing. Navigating biodiversity issues in coastal communities will also become more important as demand for ocean space is set to increase fivefold by 2050."China has overtaken Europe as biggest market More than 99% of the total global offshore wind installation is in Europe and Asia-Pacific today, but the US is investing heavily in this sector and China has overtaken Europe as the world's biggest market, with half of the world's offshore wind installations in 2023 expected to be in the country. In 2022, 8.8GW of new offshore wind capacity was added to the grid with global installed capacity reaching 64.3GW. Around 380GW of offshore capacity is expected to be added across 32 markets over the next 10 years, according to the Global Wind Energy Council, with half of that growth expected to come from the Asia Pacific region. "Offshore wind is poised to play a pivotal role in Asia as economies decarbonize their power supply. The sector is still relatively young and rapidly growing, and it is essential that projects are conceptualized, designed, and engineered for the known risks ahead that they will face, such as natural catastrophes, supply chain challenges, and other emerging risks due to technological advancements," says Trent Cannings, Regional Head of Natural Resources and Construction, Allianz Commercial Asia. While growth ambitions are huge, all is not plain sailing for developers, according to the report. Spiraling costs have halted major wind projects recently and the industry is impacted by inflation, capital expenses, rising interest rates, and geopolitical instability. The cost of materials and vessel hire have risen, while the supply of materials and access to contractors remains challenging. Supply chain bottlenecks, lengthy permitting procedures and delays to grid connections are also exerting pressure. "The scale and scope of the global offshore wind roll-out is epic. It requires the expansion of manufacturing footprint, port facilities, and infrastructure. And it needs to be fast-tracked by all stakeholders in a joint effort – financial institutions, corporates, and governments," says Adam Reed, Global Leader Offshore Renewables and Upstream Energy, Allianz Commercial.Cables top cause of claims Both the energy sector and the insurance industry have considerable expertise when it comes to managing the perils of offshore wind activities. In one of its largest offshore wind insurance markets, Germany and Central Eastern Europe, Allianz Commercial has seen 53% of offshore wind claims by value from 2014 to 2020 relate to cable damage, followed by turbine failure as the second major cause (20%). From the loss of...