GCube Lists Most Common Wind Insurance Claims

NAW Staff, Tuesday 06 August 2013 - 11:34:34

Blade damage and gearbox failure are the most common U.S. wind energy insurance claims, according to renewable energy insurance services provider GCube.

Based on 2012 reported U.S. claims data, blade damage and gearbox failure account for the greatest number of losses - accounting for 41.4% and 35.1% of the total claims reported. Other leading claims were damage to generators (10.2%) and transformers (5.1%) followed by damaged to foundations.

When assessing and understanding the reason cited for the initial claim, GCube says poor maintenance (24.5%) and lightning strikes (23.4%) were the most frequently reported causes of loss, followed by design defect (11.5%), wear and tear (9.3%), and mechanical defect (6.2%).

Industry standards define a design defect as a fault that is inherent in the design of the product itself. A mechanical defect is a more generic term for a mechanical flaw and/or malfunction. This includes but is not limited to a material defect that would prevent the equipment from functioning as designed, such as metal fatigue, failure and blade delamination.

Although the majority of wind turbine blade damage can be attributed to lightning strikes, delamination and improper handling during the construction and installation phase are also frequent and need to be addressed.

Poor maintenance contributes significantly to the leading cause of gearbox failure with design defect factoring into loss frequency as well.

According to the independent analysis, gearbox claims typically cost the industry $380,000, while turbine blade claims cost an average of $240,000, per claim. Claims associated with the wind turbine foundations are typically higher, averaging $1.3 million and have risen to $2.5 million in exceptional circumstances throughout the 2012 period.

The average claim cost for repair or replacement includes business interruption and all other related fees and expenses before the insured’s deductible has been applied.

GCube says its analysis reinforces the belief that turbine durability and implementation of effective operations and maintenance (O&M) programs are needed for the U.S. wind community to thrive.

"While the industry can do little to reduce the risk of lightning strikes, we are pleased to see some of our insured working with manufacturers and O&M providers to add blade assurance programs to their maintenance agreements that cover the repair or replacement of a blade damaged by lightning in light of the frequency of this natural occurrence," says John McLane, GCube's president.

GCube notes it has paid out more than $200 million in claims to the renewable energy industry since 2008, with the majority of this figure coming from the wind sector.


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