Global corporate insurer Descartes Underwriting has launched a new parametric insurance product to protect utility-scale solar farms against tornado damage.
The product’s coverage leverages satellite data and cutting-edge analytics to protect investments in the renewable energy transition.
Specifically, it focuses on safeguarding photovoltaic solar farms in the United States with a generation capacity exceeding 10MW from the physical and financial impacts of tornadoes.
This includes coverage for damage to infrastructure, business interruption, and other less tangible consequences.
“Payouts are calculated when an identified tornado – even one as weak as the Enhanced Fujita (EF) Scale – enters the mapped surface area of the insured windfarm and causes damage to panels, as identified by very high-resolution satellite imaging. The percentage paid of the pre-agreed limit, up to $70 million, matches the percentage of the surface area damaged,” Descartes explains.
For example, a tornado hits a solar farm insured for $50 million, the National Oceanic and Atmospheric Administration (NOAA) confirms the tornado’s path, and satellite images reveal damage to 15% of the solar panels.
In this case, the insured party would quickly receive a $7.5 million payout (15% of the total coverage) within weeks of the tornado.
Descartes Chief Insurance Officer and Co-Founder Sébastien Piguet said: “Parametric tornado policy indexes are usually based on windspeed estimates. This product, developed by Descartes’ R&D team, reduces the basis risk by leveraging state-of-the-art technology.
“It combines the accuracy of on-site assessment with the parametric benefits of swift, transparent claims payments. It is the next generation of parametric insurance products.”
Tanguy Touffut, Co-Founder and CEO of Descartes stated: “Advances in data and computing power allow us to abandon traditional ways of doing insurance. In their place, we continue to develop new solutions that protect society from the effects of climate change.
“With this new tornado product, we can protect investments in the energy transition from the relentlessly rising number of Severe Convective Storms, which inflict debilitating damage on solar panels.”
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