Insuring the NetZero Transition

Abstract

Zurich North America (ZNA) commissioned this report to explore the rapidly evolving climate tech landscape and identify opportunities for the insurance industry to support and capitalize on the growth of key sectors, with a focus on offshore wind and carbon capture and storage (CCS). The report analyzes market trends, risks, and challenges in these sectors and provides actionable recommendations for ZNA to position itself as a leader in the climate tech insurance space. Key Findings: 1. Offshore wind and CCS are poised for significant growth in the coming decades, driven by supportive government policies, technological advancements, and the urgent need to decarbonize the energy sector. 2. The global offshore wind capacity is projected to reach 330 GW by 2030, with the US and European markets leading the way. CCS is expected to play a critical role in achieving net-zero emissions targets, with the potential to capture and store up to 15 Gt of CO2 annually by 2050. 3. Both sectors face unique risks and challenges, including high capital costs, supply chain constraints, regulatory uncertainties, and potential environmental and safety hazards. Insurers can develop specialized expertise and products to effectively manage these risks. Recommendations: 1. Develop tailored insurance solutions for offshore wind and CCS projects, covering construction, operation, and decommissioning phases, as well as third-party liabilities and environmental risks. 2. Invest in data analytics and digital capabilities to better assess and price risks, monitor asset performance, and optimize underwriting processes. 3. Forge strategic partnerships with key stakeholders, including project developers, technology providers, and research institutions, to stay at the forefront of industry developments and collaboratively address challenges. 4. Enhance risk engineering and loss control services to help clients minimize risks and improve project performance, while incentivizing the adoption of best practices and safety standards. 5. Establish a dedicated Climate Tech Insurance Innovation Lab to foster cross-functional collaboration, develop innovative products and services, and explore new business models and revenue streams. Potential Impact: By implementing these recommendations, ZNA can establish itself as the go-to insurer for offshore wind and CCS projects, capturing a significant share of these growing markets. This will not only drive premium growth and profitability but also contribute to the global transition to a low-carbon economy. Additionally, ZNA's expertise and innovative

solutions in these sectors can be leveraged to explore opportunities in other climate tech domains, such as solar energy, electric transportation, and energy storage. Ultimately, the climate tech revolution presents a unique opportunity for ZNA to align its business objectives with the urgent need for climate action. By proactively adapting to the changing risk landscape and developing innovative solutions for offshore wind and CCS, ZNA can secure its position as a market leader and make a meaningful contribution to a more sustainable future.