It’s not easy writing green, but insurance must evolve or fall behind

Fraser McLachlan (pictured) doesn’t mince words when it comes to the insurance industry’s role in the global energy shift. “We’re not here to sponsor your R&D,” he said. “We’re here to indemnify you if something goes wrong, not to guarantee that it works.”  

As chairman of Tokio Marine GX, McLachlan has spent the last several years watching the landscape of renewable energy insurance shift beneath his feet. What began with decades of experience in onshore wind has rapidly evolved into something more complex, and far less certain.  

The clean energy projects of today are rarely as straightforward as they once were. McLachlan notes the rise of co-located, hybrid developments that combine wind, solar and hydrogen production – creating layered exposures across multiple asset types and technologies.  

That shift has exposed a data problem. While insurers are comfortable with long-established assets like onshore wind or conventional solar, newer technologies such as green hydrogen, floating wind and small modular reactors lack the historical performance data needed to model losses and price accurately.  

“He who holds the data will win the war,” McLachlan said, suggesting that insurers looking to lead in this space must either build or buy analytical capabilities tailored to green transition risks.  

Insurers are increasingly expected to do more than just provide cover. In certain jurisdictions, especially the United States, McLachlan says they’ve begun offering products that help developers secure financing by covering exposures like missed tax credits due to project delays.  

“If it allows the developer to borrow money more cheaply,” he said, “then that’s a very real way the insurance industry can help the transition.”  

This approach reflects a broader trend toward more strategic involvement in green finance, where insurers are not just transferring risk but enhancing bankability. It also raises expectations around insurers’ technical understanding of projects and their ability to lead structured placements.  

McLachlan notes a major shift in how transition-related risks are underwritten. “Ten years ago, insurers were writing 100% of these risks. Now it’s mostly quota share,” he said. That shift has enabled greater capacity, especially in offshore wind, but it has also diluted leadership in the market.  

“There are loads of markets that will follow, once somebody sets a price,” he said. “Very few that will actually lead.”  

Leadership matters, McLachlan argues, because it brings control over claims handling – a critical issue as losses become more complex and cross more disciplines.  

Perhaps most importantly, McLachlan says the market must learn to think beyond one-off project timelines. “We were going project by project,” he said. “Now we’re trying to look ahead five or ten years.”  

This means considering how today’s underwriting decisions will align with longer-term shifts in the energy mix. Technologies still struggling for commercial viability, such as tidal or wave power, may look promising, but until they can demonstrate scalability and attract conventional lenders, they remain difficult to insure.  

Geography is another front in this shift. While the market’s centre of gravity was once in North America and Europe, McLachlan says the Middle East, Asia, South Africa and Australia are becoming increasingly active, even in countries where fossil fuel dominance once seemed unshakable.  

“There’s still a big degree of optimism in the industry,” he said, noting that green energy’s commercial competitiveness, especially in solar, has changed the political and financial calculus in many regions.  

As energy transition risks grow more complex, the gap between insurable exposures and available products is becoming harder to ignore. Technologies are advancing faster than underwriting frameworks, and new markets bring unfamiliar volatility.  

For insurers and brokers alike, the challenge is not just capacity, it’s capability. And those who adapt underwriting strategies to reflect the realities of hybrid technologies, constrained supply chains and long-tail risks will be best positioned to lead.