Reinsurance News | By: Marianne Lehnis | 28th June 2017:
Along with wind and sun, China has harnessed the power of insurance to catalyse its clean energy revolution, after having successfully pioneered government led re/insurance partnerships to safe-guard regional development with an index insurance scheme that makes a post-disaster payout to local government.
To further advance its green energy revolution and continue to grow its renewables market, China needs to show investors that it can protect their assets against the volatility of weather-based production and revenue loss.
Last year, seven Chinese government ministries noted the need for insurance to protect against climate related events in their guidelines for establishing an economy that supports environmental protection and clean energy.
This is where re/insurers come into the picture, with index-triggered solutions ensuring prompt indemnity payments and therefore predictable turnover that stabilizes the value of shareholders’ investments.
The insurance model is based on transparent data calculations of actual wind speed or amounts of solar irradiation per year from third party providers such as NASA.
The promise of a steady cash-flow irrespective of the weather will provide the solid foundation needed for the renewable sector’s further development and growth in line with the government’s 12th Five-Year Plan for developing second – and third-tier cities and green and efficient energy.
Swiss Re said China is also shoring up its infrastructure development, creating disaster resilience through complementing the traditional insurance covers during construction and operation with additional index-triggered protection, similar to those in place for the regions of Heilongjiang and Guangdong.
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