An Insurer Roadmap for Navigating the Energy Transition

An Insurer Roadmap for Navigating the Energy Transition
June 23, 2025 8 mins

An Insurer Roadmap for Navigating the Energy Transition

A Reinsurance Roadmap for Navigating the Energy Transition

The energy landscape is rapidly changing, presenting the re/insurance industry a unique opportunity to facilitate the transition to a sustainable economic model

Key Takeaways
  1. Traditional oil and gas companies are evolving into hybrid energy firms, investing in renewables and transition technologies like hydrogen, battery storage and carbon capture — shifting their risk profiles and prompting the insurance industry to adapt accordingly.
  2. Insurance has a pivotal role in the energy transition by protecting green assets during both construction and operation phases and managing associated risks.
  3. Insurers are supporting the transition by developing their skills to underwrite new technologies and using advanced data analytics for innovative insurance products and risk management.

As specialists in assessing, pricing, mitigating and transferring risk, insurers are fast-tracking innovation to power the global energy transition — ensuring the risk capacity needed to scale renewable energy sources and emerging energy technology like solar and wind.

Embracing Change and Navigating Challenges

The energy landscape is changing at an unprecedented pace. Despite concerns about setbacks in the global deployment of clean energy technologies, the latest data points to continued growth.1 This rapid change presents an opportunity for the insurance industry to respond swiftly and effectively.

  • 2025

    is likely to be the year of peak emissions.

    Source: International Energy Agency

  • 28%

    of electricity generation will come from wind by 2050.

  • 50%

    of new passenger vehicles will be electric by 2031.

Insurers play a crucial role in facilitating investments in the transition, protecting green assets during both construction and operation phases, and managing the risks associated with emerging clean technologies and volatile supply chains.

However, there are several challenges when it comes to underwriting renewable energy projects:

  • Maintaining profitability amid unprofitable construction risks, as commonly seen in offshore wind projects
  • Exposure to natural catastrophes (nat cat) like hail and strong winds
  • Evolving technological risk
  • High claim costs, particularly for battery energy storage systems
  • Rising costs due to geopolitical uncertainties like tariffs and trade disputes
  • Limited historical data for new technologies, such as battery energy storage, which further complicate risk assessment and pricing

To address these challenges, insurers need to continuously update their expertise and develop innovative coverage solutions.

“Developing skills to underwrite emerging technologies like battery energy storage and carbon capture is essential,” says Wouter Bosschaart, global climate and net-zero transition lead in Aon’s Reinsurance strategy practice. “This will allow insurers to meet the unique demands of evolving industries and unlock long-term opportunities. Now is the time to proactively plan for sustainable practices, align business strategies with anticipated regulatory changes and meet market demands.”

Growing Energy Transition Landscape Needs a Flexible Insurance Partner

Growing Energy Transition Landscape Needs a Flexible Insurance Partner

By 2030, traditional energy sources may still dominate global electricity production, underscoring the continued importance of fossil fuel industries. However, renewables are expanding faster than any other technology, representing the energy sector’s most significant growth opportunity. In response, traditional oil and gas companies are evolving into hybrid energy firms by investing in transition technologies like hydrogen, battery storage and carbon capture. As a result, firms are shifting their risk profiles and prompting the insurance industry to adapt accordingly. Insurers have the rare opportunity to address new forms of volatility and act as a catalyst for the global energy transition, both through product and solution innovation.

Energy Transition-Related Technologies Show Higher Annual Growth Rates

Historically, most view global macrotrends through the lens of risk rather than opportunity. However, more and more insurers are starting to look at the future more strategically.

Unlike traditional industries that follow a GDP growth pattern typically between 1 and 3 percent,2 renewable energy and transition-related technologies, such as battery storage and hydrogen, exhibit significantly higher combined annual growth rates (CAGRs), ranging from 5 percent to sometimes up to 30 percent.3 This stark contrast is why investors and insurance companies are turning their attention to these opportunities, as they could represent a considerable portion of future portfolios and gradually replace investments in traditional industries.

While progress related to portfolio emissions transparency and target setting varies by geography, the growth opportunity presented by the net-zero transition could be a key strategic priority for insurers around the world.

$368B

Natural disasters caused $368 billion in economic losses in 2024 — of which only $130 billion was covered by insurance.

Source: Aon’s 2025 Climate and Catastrophe Insight

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Those taking early steps toward technologies and sectors that support the net-zero transition are likely to have a first-mover advantage, just as insurers that built early capabilities in renewable energies are now leading the market.

Liz Henderson
Global Head, Climate Risk Advisory

Top Emerging Opportunities for Insurers in Energy Transition

Understanding the medium and longer-term opportunities can help insurers strategically capture high-growth rates in the energy transition space:

  • Solar PV and Wind

    Onshore wind and solar PV in Europe and North America tend to be more profitable compared to other regions, with opportunities in both the construction and operations phases. Insurers can offer solutions for profitability, nat-cat exposure, technological advancement and high claim costs.

    The current rate trends for these technologies are positive, with Europe and North America experiencing rate increases from 1 to 10 percent.7 However, offshore wind projects face challenges in profitability due to the high risks associated with the construction phase. Despite this, operational risks for offshore wind are more profitable, and carriers often write construction risks to access these more attractive operational risks.

    In North America, both the construction and operations phases of onshore wind and solar PV projects are equally profitable and independently contracted. Specifically, our analysis highlights the commercial solar segment of rooftop-generated solar PV, which is driven by rising energy prices, the global energy crisis and national regulations.

    However, rooftop panels do have increased risk profiles compared to utility panels due to greater exposure to natural catastrophe risks, like hail and wildfire. These risks can cause losses and impact the claims processes for insurers.

  • Hydrogen Economy

    The hydrogen economy presents opportunities across production, transport and storage, and end-user markets. Insurers can develop innovative solutions, such as green hydrogen shipping insurance, end-to-end hydrogen full value chain insurance, prototype coverage flexibility, performance coverage, and leak detection and telemetry platforms. The projected GWP opportunity size by 2027 is estimated to be more than $5 billion, with a high CAGR of more than 10 percent from 2024 to 2030.5

    Currently, Europe accounts for the majority of the global GWP and is expected to continue to grow. APAC holds the next highest share of the hydrogen GWP, driven by China's dominance in hydrogen production and Australia's investment into the hydrogen economy.6

    Developing innovative solutions across underwriting, product and service innovation, and data and analytics alongside traditional P&C cover areas can help to unlock this opportunity. However, key headwinds include high production costs and unprofitability due to unknown risks.

  • Battery Energy Storage Systems (BESS)

    BESS presents a sizable and growing opportunity for insurers, including traditional property and casualty (P&C) cover, warranty and performance cover, cyber for smart systems, parametric outage triggers, energy-as-a-service embedded insurance, residual value guarantee products and battery health-linked premiums.

    The projected gross written premium (GWP) opportunity size by 2027 is estimated to be more than $1 billion, with a high CAGR of ~25 percent between 2024 to 2030.4* This growth is driven by various segments, including:

    • Utility batteries, which help integrate variable renewable energy into the grid by smoothing out supply
    • Manufacturing batteries for both electric vehicles (EV) and storage applications, repurposing "second life" EV batteries for storage and using EV batteries to supplement grid flexibility through smart charging
    • Behind-the-meter batteries, which cater to commercial, industrial and residential customers, typically installed with rooftop solar photovoltaic (PV)

    The Asia Pacific (APAC) region currently constitutes approximately half of the total market for BESS, with China holding the lion’s share. South Korea, too, is a sizable market and often looks to Singapore markets for capacity on large and complex accounts. London plays a crucial role in arranging insurance for the key countries driving the adoption of BESS in Europe, including the UK, Germany and Spain, as well as for the U.S., which holds a significant market share. Chile is the primary early adopter of BESS in South and Central America; however, the premium opportunity is limited.

    Some risks associated with BESS, such as thermal runaways leading to fires or explosions and performance degradation due to environmental exposure and charging cycles, will require innovative insurance products that can help to serve the needs of this evolving market.

Top Emerging Opportunities for Insurers in Energy Transition

The Insurer’s Energy Transition Roadmap

  • 01
    Embrace Change

    Innovate to establish processes that can enable your organization to embrace change and take advantage of new opportunities.

  • 02
    Develop Expertise

    Invest in developing skills and expertise to underwrite emerging technologies like renewable energy and carbon capture.

  • 06
    Coordinate Globally

    Leverage global networks to provide comprehensive coverage and support for clients operating in multiple regions.

Learn more about Aon's energy risk insurance and how reinsurance can help your organization navigate the complexities of climate change.

Aon’s Thought Leaders
  • Wouter Bosschaart
    Director, Strategy and Technology Group
  • Liz Henderson
    Global Head, Climate Risk Advisory
  • Megan Hart
    Global Head of Analytics and Collaborations, Climate Risk Advisory

1 Clean energy transitions continue to accelerate, but progress is uneven, IEA
2 Global Economic Outlook, IMF
3 New Energy Outlook, BloombergNEF
4 Aon STG Analysis
5 Aon STG Analysis
6 Aon STG Analysis
7 Aon STG Analysis

*Unless otherwise noted, all data points included are based on Aon research and analytics.

General Disclaimer

The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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