The report says at least $10 trillion in insurance is needed to reach net zero

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Insurance will be crucial for more than half of the $19 trillion in investments committed to funding the transition to net zero, according to a new report, causing “unprecedented structural pressures ” up the field.

Insurance broker Howden and Boston Consulting Group have concluded that at least $10 trillion in new insurance will be needed for the energy, trucking and construction sectors between 2023 and 2030, including Huge infrastructure projects such as offshore wind power, solar farms, as well as large infrastructure projects. Insulation of existing housing stock.

Rowan Douglas, chief executive of Howden’s climate team, said the report was meant as a “wake-up call” about the vital role insurance plays in the energy transition and the challenges this presents fabricate. Market tensions will be “all over the place,” he added.

“We will take this energy transition globally, at speed and at scale, all at once.”

Regulators and policymakers are increasingly focusing on insurance’s supporting role in building the infrastructure and technology needed for the energy transition, and are asking whether the industry Do you have enough capacity to handle these complex and widespread risks?

Insurers are already offering additional coverage in many areas from hydrogen powered and tram ARRIVE Seabreeze and hybrid building materials, and plans to expand into newer technologies. But there is also pressure on insurers to be cautious about the level of new risk they face in areas that lack historical loss data.

“New energy technologies are driving innovation and are therefore risky, and [so] Bail is harder to come by, Rowan said. “If there is a lack of capacity, it is likely that capacity will shift to areas that are better understood and more profitable.”

Insurers are also working closely with green energy groups to mitigate the risks of new technologies and projects, such as adjusting the position of solar panels when bad weather is imminent. following some recent bouts of heavy hail damage.

The report’s authors also said they do not expect the amount of insurance provided to fossil fuel projects to decline sharply – freeing up capacity to insure green projects – by the end of the decade.

“While one might expect an offset of new investments over traditional, that will not happen in the short term,” said Raphael Troitzsch, chief executive of BCG. The need to provide more insurance against natural disasters will put pressure on the sector, the report said.