Swiss Re could pay Solar Impulse 2 claim - FREE

Swiss Re could pay Solar Impulse 2 claim - FREE

Solar Impulse 2Solar Impulse 2, the solar plane recently forced to postpone its bid until 2016 to fly around the world using only solar power, could need Swiss Re to pay out on weather related damage during its halted circumnavigation bid.  

The pioneering plane got partway through its Pacific crossing, having landed at Honolulu, Hawaii, before damage delayed its circumnavigation attempt until 2016.

Weather related damage had already caused the plane's Pacific journey to be delayed by over a month. Solar Impulse 2 cannot fly if wind speeds are more than four knots (4.4mph / 7km/h), as the plane is too light to safely operate in such conditions.

Swiss Re said a claim from the plane would take many factors into consideration, weather being one of them.

The complex venture was 100% insured by Swiss Re Corporate Solutions (SRCS), which provided hull insurance (to the value of CHF12.5m), as well as third-party liability cover for the innovative aircraft.

“This specific risk was described as uninsurable because a solar aeroplane on a standalone basis has never been insured in the aviation market before,” said Michel Rohr, SRCS expert underwriter of aviation, who arranged the underwriting and coverage for Solar Impulse.

“When something comes along and it has never been insured before, it is all about the underwriting and assessing the risk so that you can put a price tag on it and identify how much capacity you want to deploy,” he said.

Solar Impulse 2, took off in May from Nanjing, China, en route to Hawaii, but bad weather forced Borschberg to land in Nagoya, Japan, where it was found damage had been sustained, postponing its circumnavigation attempt until next year. 

“There is no current claim but there is a potential one because the plane was on the ground in Japan and some repairs had to be made,” said Rohr, speaking as the damage first became known but before the final postponement decision.

“An eventual claim would depend on a number of factors, such as weather or wind speed.

“We cannot say and it's difficult to estimate at this point in time. We will find out more in the next few weeks,” he added.

Precondition for innovation

Swiss Re was keen to take on the venture. Jürg Trüb, head of environmental and commodity markets for SRCS, said: “It is such a special risk, and it gave us the opportunity to prove that we could do something this complex.

“We intentionally made it clear that we wanted to take this risk 100%, despite some other insurers being interested.

“From a Swiss Re Corporate Solutions perspective we also think that insurance is one of the preconditions for a lot of innovation and important undertakings of society, if you think about infrastructure projects, for example,” he said.

Another important reason for SRCS taking on the risk is the Conference of the Parties (COP), an international climate change meeting of global leaders to be held in Paris in November this year, which is expected to result in an agreement of future emissions regulations.

Trüb said: “We as an insurance company as well as Solar Impulse do hope that the outcome of COP will be to effectively curb future emissions.

“The aspiration for a world less dependent on fossil fuels brings Solar Impulse and Swiss Re Corporate Solutions together.

“You won’t see many planes like this. The whole plane is a symbol of a belief that renewable energy and clean technologies will help mankind to curb the impact of climate change,” he said.

The amount of financing needed for future power generation amounts to trillions of US dollars, so SRCS places a heavy importance on financing low carbon intensive power production.

“Our weather solutions address the volatility in cash flows from wind farms and solar photovoltaic projects and thereby enable them to access funding or better refinancing conditions,” said Trüb.

By offering such solutions Swiss Re aims to contribute to unlocking capital for increased renewable energy investment, Trüb argued.

One example is a recently announced deal to insure an Australian wind hedge, covering more than 500 megawatts of wind energy. 

Swiss Re is also working a project in China together with Alltrust Property Insurance, which marked the first solar radiation index transaction in China.

It's the first time that a Chinese solar power plant uses this type of solution to protect its power generation revenue. 

By Victoria Beckett - vbeckett@euromoneyplc.com

Latest Issue

November 2017

 

In this month's Reactions

  • Hurricane update
  • North America Awards
  • PCI Roundup
  • Baden Baden update

CLICK HERE TO READ THE LATEST ISSUE

 

Follow Us on Twitter @reactionsnet

Catastrophe Centre

Catastrophe Centre