By making risk their business, insurers enjoy a unique insight into the industries in which they operate. With a clear vantage point of the sector coupled with inside information on why costly mistakes have been made, insurers should play a pivotal role in knowledge exchange within the offshore wind industry. Yet most developers wait until the last minute to bring the insurers on board – and in doing so, miss out on a huge opportunity for risk mitigation.
“The insurance market sees everything. We are more informed about lessons learned than any other party out there,” says Jatin Sharma, head of GCube’s offshore renewable energy unit. “But most developers hold off bringing the insurance company on board until around a month before financial close – by which time it is too late for any transfer of best practice knowledge.”
The offshore environment is harsh and things often do go wrong. So far, however, there is limited evidence that the industry is learning from its mistakes; on the contrary, insurers are seeing the same mistakes being repeated.
An example of this is the installation of infield and export cables. The blame surely lies in the fact that the cable market is limited to a handful of players and that there is a tendency among these players to fire employees when mistakes are made is. It is impossible to learn from past experience with such a high turnover of personnel.
Another issue beginning to characterise this particular sector of offshore wind farm installation is moral hazard – where contractors seek to benefit from making mistakes instead of getting things right first time. “The way things are, contractors actually stand to make more from getting it wrong. This introduces an element of moral hazard in the margins contractors make on remedial work for developers”, notes Mr Sharma.
