Wednesday, April 20, 2011

New Types of Insurance Reduce Risk and Accelerate the Adoption of Green Energy

Insurance companies are finding that there is money to be made in green technology. In response to growing demand, new types of policies are emerging that provide protection for businesses involved in the green economy.

Some insurance companies are backstopping warranties on solar panels, or protecting against lulls in the wind needed to drive turbines. This is helpful to start-ups whose customers can rely on guaranteed performance. These types of policies can also help to make project financiers feel more secure. The number of companies offering warranty insurance policies is growing quickly, from only a few a year ago, to approximately 12 companies today.

Some property insurance rebuilds a structure in a more environmentally friendly and energy-efficient way in the event of loss. Other policies are geared to cover the activities of carbon traders.

Green policies support modernization by encouraging the development of new technology and enhancing innovation. The research conducted by the insurance companies who underwrite these policies helps the market to better understand itself. This information can prove helpful in very practical ways, for example some insurers are advising clients on issues like solar panel installation.

The green insurance industry can expect meteoric growth in the next five years, particularly as the government introduces green energy mandates.

These new policies respond to the needs of companies who are investing in green technology and looking for ways to shield themselves from risk. By assessing, quantifying and spreading risk, these policies have an important role to play accelerating the adoption of green energy.

© 2011, Richard Matthews. All rights reserved.

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