1. Why is Assurant entering the solar insurance market?
Assurant’s entry into the solar insurance market is part of its ongoing efforts to provide insurance products in niche markets to satisfy unmet and emerging market needs. During the past 18-months, Assurant studied the needs of commercial solar developers and developed the Assurant Solar Project Insurance to meet those needs by leveraging our specialty insurance and warranty expertise.
2. What are the challenges for Assurant entering into this market?
The solar market is a technically complex industry and understanding the true needs of solar developers has been a challenge. As a result, Assurant conducted an in-depth study of market participants to find out what they wanted in their insurance coverage. In addition, we sent out an RFP to develop a solar project at one of our call centers. It was a tremendous and valuable learning experience to help understand how difficult concluding project financing can be.
3. Why is insurance so important to Solar Projects?
The inability of some solar project developers to secure the right coverage coupled with concerns about the long-term viability of equipment manufacturers has created fear and uncertainty in the marketplace, preventing some investors from financing projects. The insurance bundle reduces those fears by protecting cash flows and allowing developers to fast track project funding as financing parties won’t need other types of insurance to be in place before considering loans as Assurant Solar Project Insurance covers all insurable risks.
4. What is the difference between Assurant Solar Project Insurance and other solar insurance products on the market?
Assurant Solar Project Insurance is the only insurance coverage that protects commercial-sized solar project developers and investors throughout the project lifecycle. This unique insurance bundle provides commercial solar developers with the industry’s first warranty management and insurance bundle for all phases of project development. This combination is critical to satisfying lender and investor requirements to protect project viability.
5. What type of solar projects are you typically insuring?
Initially, we are looking to insure and protect commercial solar photovoltaic projects in the 100KW to 3 MW range. These are the types of projects you’d see being installed at universities, hospitals, big box stores and warehouses among others.
6. What aspects of the project are covered by the insurance and to what extent?
Assurant Solar Project Insurance provides coverage throughout the life-cycle of the project. Specifically, there are three components to Assurant Solar Project Insurance:
Liability coverage – This coverage is available as soon as solar development projects are formed as Special Purpose Entities. Liability insurance covers bodily injury and property damage liability up to $1 million occurrence and $2 million general aggregate. This insurance provides protection for damage or injury done to others. There also is optional auto/employer liability coverage available.
Property coverage – Property coverage is available during the installation phase and when the project is operational. It covers physical damage due to natural perils such as lightning, hail, tornado and earthquake, as well as electrical/mechanical breakdown. This coverage also protects business income - including solar renewable energy credit income - that is lost due to a covered event.
Warranty management – Assurant provides warranty management services, offering one- point of contact for all warrantied solar project equipment, regardless of the manufacturer. This simplifies claims authorization, payment and the management of any claim. Assurant also provides a backstop to the original equipment manufacturer’s warranty in the event of an insolvency. Optional coverage also is available for costs associated with de-installation, shipping and re-installation of covered equipment.
7. Assurant interviewed solar developers throughout the country to design this insurance coverage. What were some of the common issues developers raised about the current coverage being offered?
In listening to solar project developers, lenders, brokers, solar service providers and equipment manufacturers, we learned that there were several issues that we could address in our solar insurance offering to make it easier for solar developers to complete projects. For example, we heard that insurance coverage that was previously available for projects were sized for larger developments. As a result, the minimum premiums for projects in 100KW to 3 MW range typically have been higher than they needed to be. Assurant Solar Project Insurance is right-sized for each project and provides warranty management, which also has been lacking.
Developers also wanted a comprehensive package that would eliminate the need for them to deal with multiple companies (equipment manufacturers and property/liability insurance companies) to protect the cash flows of their projects. Assurant address those concerns by providing a single point of contact to resolve issues by combining warranty management with property and liability phase-specific coverage.
8. What is the cost of the insurance (based on the project budget numbers)?
One-carrier coverage allows us to offer bundled pricing due to efficiencies.
Typically, insurance coverage premiums for commercial-sized solar projects were based on coverage needed for larger facilities. The one-size-fits-all approach inflated insurance costs for commercial-sized projects. Assurant’s offering is right-sized to meet specific project needs and more affordable because the one-carrier coverage of all risks enables us to offer bundled pricing, which reduces costs. Typical annual premiums for the bundle (which vary by location and equipment selection) are less than one percent of the project’s capital cost.
9. How many projects do you currently insure?
We currently are insuring 11 projects in three states that are generating 7 MW.