GCube charts rise in undersea cable claims - FREE

GCube charts rise in undersea cable claims - FREE

More than 90 increasingly costly subsea cable incidents have been recorded since 2008, GCube has reported.

The specialist renewable energy underwriter charted €60m of insurance claims in 2015 from undersea cables, representing the most costly cause of financial losses in the global offshore wind industry.

The 25% rise in claims severity last year is included a new GCube report "Down to the Wire: An Insurance Buyer’s Guide to Subsea Cabling Incidents", focused on causation, financial impact and mitigation of subsea cabling incidents. 

As the European offshore wind sector prepares to enter an extended phase of deep-water construction and new markets open up in North America and Asia, it is crucial that the industry starts to address a problematic bottleneck that can cause 100 days or more of unscheduled project delays and create substantial cost overruns,” said GCube.

On average, at least 10 subsea cable failures are declared to insurers each year in the offshore wind sector, according to the firm.

While claims frequency is low, the financial severity of incidents for developers, project owners and offshore transmission owners continues to grow, reported the insurer, so that they now account for 77% of the total global cost of offshore wind farm losses.

“Managing this financial impact will be essential if the industry is to meet increasingly stringent cost reduction targets and maintain its appeal to the international investment community,” said GCube.

“Crucially, the report finds that two-thirds of cable faults recorded in GCube’s extensive claims database can be attributed to contractor error during the installation phases, even if these do not manifest until the wind farms are operational,” said the insurer.

GCube thinks this highlights an increasing need for quality control during cable laying and also in building more effective communications channels and improving data collection procedures.

“It’s striking just how often subsea cabling incidents in offshore wind can be traced back to human error,” said Jatin Sharma, GCube’s head of business development, who authored the report.

“Cable installation techniques and monitoring technology are continuing to evolve as the industry looks to address this challenge – however recurring losses are still commonplace, and the number of ‘repeat offenders’ is a source of concern for the insurance industry,” said Sharma.

“Ultimately, when it comes to sharing lessons learnt, there’s no substitute for full transparency and consistent dialogue between project teams and the industry at large. A behavioural shift may be needed when it comes to the risk/reward balance developers agree in supply and installation contracts. In an industry aggressively driving down costs, there is clearly not enough margin for contractors to try and improve,” he added.

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