Mon, Oct 22, 2018 - Page 16 News List

Wind farm premiums to be 30% higher: insurers

By Kao Shih-ching  /  Staff reporter

Offshore wind farm developers in Taiwan might have to pay 30 percent more in insurance premiums than their European counterparts due to frequent earthquakes and typhoons and the government’s local content requirements, Aon Taiwan Ltd (怡安保險經紀人) said on Monday last week.

Seven offshore wind farm developers survived the two-stage selection process completed in June and have gained the right to sign contracts with state-run Taiwan Power Co (Taipower, 台電) to build 12 wind farms along the west coast as the government aims to build 5.5 gigawatts (GW) of offshore wind power capacity by 2025.

Given the significant costs of wind turbines and marine engineering, the offshore wind developers need to buy insurance to cover their risk, but many developers in Taiwan are considering foreign insurance products, as domestic insurers have little experience with designing policies for wind farms, Aon Taiwan chief technology officer Clive Lin (林彥碩) said at a news conference in Taipei.

Due to concerns about earthquakes, typhoons and other natural disasters in Taiwan, European insurers estimate that insurance premiums for Taiwanese wind farms will be at least 30 percent higher than those for European offshore wind farms, Lin said.

In addition, government-imposed local content requirements in Taiwan would also prompt European insurance companies to raise their risk assessment for local wind farms and thus the premium, as they do not consider the local supply chain mature, Lin said.

“Taiwan may be the first Asian nation which has to deal with the earthquake and typhoon issue when calculating insurance fees,” Aon Taiwan managing director Brian Wang (王獻麟) told the Taipei Times by telephone.

While typhoons often strike Japan, it is difficult to refer to Japanese insurance product design, because Japan has made less progress in offshore wind farm development than Taiwan, Wang said.

“The risk is too high,” an official at Cathay Century Insurance Co (國泰世紀產險) said, adding that domestic firms cannot insure Taiwanese offshore wind farms all by themselves and would need to purchase reinsurance abroad.

The Ministry of Economic Affairs is drafting national standards for typhoon and earthquake-resistant construction, but Cathay Century believes that meeting those criteria would not help reduce insurance premiums, the official said, speaking on condition of anonymity.

The national standards “are minimum requirements. We have seen a number of incidents where wind turbines toppled onto the ground, even though they all met the standards,” the official said.

Cathay Century has worked with Fubon Insurance Co (富邦產險) and Shin Kong Insurance Co (新光產險) to insure Tawan’s first demonstration offshore wind farm off Miaoli County, with a design capacity of 128 megawatts, the official said.

Insurance policies for offshore wind farms can be divided into those for the construction stage and those for the operation phase, which cover different risks, Cathay Century said.

The insurer’s wind farm policies only cover the construction stage.

Every individual wind turbine is at risk of experiencing shipping delays or engineering problems during the construction stage, but in the operation phase, which is estimated at 20 years, the farm as a whole is exposed to the same risks, Cathay Century said.

“When a typhoon strikes or an earthquake occurs, all turbines are affected at the same time,” the official said, adding that it necessitates different premium calculations.

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