How insurance is bridging the green transition

Imagine a plot straight out of a science fiction film: two scientists at Oxford working at an obscure start up develop a new method of clean energy that can power an entire city with a litre of water. They rush to investors so they can get the technology off the ground, but every deep pocketed financier they speak to says no. The refusal does not stem from distrust of the technology, but because investors cannot find the one thing that will give them the peace of mind needed to invest: insurance.

The single litre that can power a city is science fiction, for now. But every green technology, whether solar panels, offshore or onshore wind, battery storage or hydrogen, relies on the expertise of underwriters to turn ambitious ideas into bankable investments.

Last month, Munich Re Specialty hosted a series of expert-led sessions in collaboration with the Conduit Club to explore how insurance is bridging the energy transition.  The event brought together specialists from across the renewable energy, risk management and insurance sectors for a deep dive into the risks and opportunities shaping the transition, examining how insurance can inspire, ease and support innovation across the renewable energy industry.

Few industries understand the urgency of the green transition more than insurance. Natural catastrophes caused an estimated $108 billion in insured losses in 2025, with the Los Angeles wildfires alone accounting for around $53 billion. Once in a lifetime disasters are becoming alarmingly routine. Since the 1990s, average annual global losses from extreme weather have almost tripled, rising from around $101 billion to $280 billion after inflation.

That changing risk landscape places insurers in a unique position. They are not simply paying claims after disasters occur. They are constantly assessing how risks evolve, pricing uncertainty and helping businesses adapt before losses happen. As climate change reshapes weather patterns and governments accelerate decarbonisation, insurers can increasingly find themselves sitting at the intersection of resilience and innovation.

Their role extends well beyond traditional protection. Renewable energy projects often require billions of dollars in upfront investment, with returns stretching over decades. Without insurance, many lenders face difficulties in financing them.

As Julian Richardson, Chief Underwriting Officer for Green Solutions at Munich Re Specialty, told delegates: “In most cases, it is hard for capital to be invested in a project without it being insured, and without our sector, many projects would not get off the ground. The solutions that Munich Re Specialty brings to the market make us an important ‘risk transfer’ partner to the net zero economy.”

Juliet Davenport, renewable energy pioneer and founder of Good Energy, argued that this support becomes even more important as emerging technologies move from concept to commercial reality.

“What I think the industry has excelled at is being aware of understanding when new products technologies come to market,” she said. “They are very adept at understanding what the insurance needs of those technologies are going to be. Insurance allows capital to flood into projects at an early stage of development.”

Understanding new green technologies and providing the necessary backing is essential if projects are to get off the ground and continue operating. Consider solar farms. Across the United States, many of the country’s largest solar installations are built in regions highly prone to hailstorms. Dr Thomas Krismer, Senior Expert for Climate Risk Management at Munich Re, explained that if hail strikes a conventional gas or coal power station, much of the damage is likely to be cosmetic. The same storm hitting a solar farm can shatter thousands of photovoltaic panels, resulting in months of disruption and hundreds of millions of dollars in losses.

Texas illustrates the challenge. On an average day about 40% of all power in the state comes from solar electricity, compared with virtually none in 2010. That shift has transformed the energy mix but has also increased the system’s exposure to severe hail. Insurance helps operators repair damaged facilities quickly, replace equipment and restore electricity generation, ensuring that increasingly important renewable assets remain financially viable despite mounting climate risks.

Innovation in insurance is also extending beyond traditional policies. Parametric insurance, for example, is designed to be a claims process that responds when predetermined thresholds are met, such as wind speeds exceeding a certain level or rainfall falling below a specified amount. Because payments are triggered by measurable events rather than lengthy damage assessments, funds can reach customers far more quickly.

That speed has proved particularly valuable in developing countries, where communities often have limited financial resilience to withstand climate shocks. Parametric products have been used to provide rapid support following hurricanes, droughts and floods, allowing farmers, small businesses and local governments to recover faster and invest in rebuilding instead of waiting months for claims to be processed. By reducing uncertainty, these products also make it easier for organisations to secure financing for climate adaptation projects that might otherwise struggle to attract investment.

The transition to a lower carbon economy will require enormous amounts of private capital. That is where insurance becomes one of the most important drivers of the green transition. It gives investors the confidence to commit capital, enables innovators to move promising ideas from the laboratory into the real world, and helps communities recover when climate risks become reality. So if those two Oxford scientists ever do discover a litre of water capable of powering a city, their biggest challenge may not be convincing the world that the technology works. It may be finding an insurer willing to stand behind it. Because before the next breakthrough can change the world, someone has to make the risk worth taking.