It’s almost impossible to go a day without hearing something about green technology. It’s on the news and on television commercials and increasingly on the streets. And clean tech is poised to grow even more.
Many segments within this multi-billion dollar industry are booming. Solar energy, for instance, jumped from a $3.6 billion industry in 2009 to a $6 billion industry in the United States alone.
The growth has translated into opportunities for insurers. Some of the biggest carriers in the country are making plays for as much of this business as possible. Travelers formally created its Clean Energy & Technology Practice late last year. Chubb has had a specific clean tech unit for about three years.
Travelers has a new practice offering access to several business units, something necessary for the broad range of coverages that fall under clean technology. The carrier can insure just about everyone involved in the green technology process from the research and development stage to the finished products. These can include joint venture capitalists, contractors and subcontractors, manufacturers, site consultants and even the long-haul truckers transporting this technology.
The response to Travelers’ new tech has been strong.
“My phone has been off the hook since we came out with this,” said underwriting director for global technology, Kirstin Simonson. “It has opened up the door, and there seems to be a lot of enthusiasm.”
Simonson said that wind and solar are the company’s two biggest areas to date. This makes sense since they have been around the longest.
“They’re a little bit more stable than some of the other alternative type energies out there,” Simonson said. “Biofuels still seems to be kind of testing the market a little bit.”
She said that smart grids are another big area for the company though.
Demand varies greatly from region to region. California is one of the biggest places for solar demand, as is New Jersey.
Wind is especially big in places like Iowa and South Dakota, where more than 20 percent of electricity comes from wind.
Because of the huge scope of the clean technology industry, insurance needs can change very quickly. Simonson said that Travelers designed this new practice to be very flexible. There are not necessarily a set number of people dedicated to writing this business. Instead resources for the sector are available across the company and ready to help as needed.
“The practice was designed to be very scalable,” Simonson said. “It is designed so that it can be very flexible. If tomorrow we needed to completely shift our focus, it could handle that.”
Chubb is another large national carrier that has a unit dedicated to clean tech. The insurer has had a formal clean tech team for about three years now though it has covered these risks for two decades. The company targets a variety of risks, including everything from renewable power generation to smart grids to energy efficient companies and a lot of manufacturing, an area that fits very well with the company’s property forms.
The carrier breaks down its coverages into three major areas. The first is for renewable fuels and power generation. The second is efficiency-controlled storage technology. And the third is environmental products and systems.
Chubb looks at customization as vitally important for covering clean tech. Many clean tech companies have a huge variety of risk exposures, especially as they mature from research and development to testing to manufacturing to the full commercialization of a product.
“Clean tech is more than technology. It’s also power generation and manufacturing and R&D,” said Martin Kunz, an executive field underwriter in clean tech for Chubb. “We provide solutions for small R&D to large-scale energy production to commercialize full operations including a wide range of property and liability coverages.”
Some areas seem more ripe for growth than others.
“I think the types of businesses that will see growth will be solar power generation, bio fuel and biorenewables, areas of energy efficiency and smart grids,” Kunz said. “The prices of solar cells have dropped precipitously, which also provides an opportunity for those that are looking to build out solar plants.”
Smart grids and energy efficiency are also good areas for growth, as these don’t necessarily take huge capital overlays. Kunz said California and Massachusetts have been the leader in these areas as they have lots of venture capital funding and structure in place, including a lot of life sciences and high technology companies.
Texas and Oklahoma are areas seeing growth for renewable energy, as are Colorado and the Eastern Seaboard.
In addition to the usual clean tech suspects Chubb sees potential growth coming from companies that work with the federal government. Chubb has a lot of experience working in this area.
The U.S. Navy is testing some new biofuels, and some parts of the U.S. government are looking at working off of solar power. The government partners with clean tech companies for many of these things.
“There’s more of an intersection between clean tech and the government,” Kunz said.
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