As the global energy transition to renewables continues to gain momentum, an estimate that investment in green and blue hydrogen initiatives will exceed USD 150 billion within 2 years is pretty staggering but also understandable given the scale of the necessary infrastructure involved - from production right through to distribution.
What is surprising, given the short lead time, is that the insurance offering for the industry seems to be pretty, well, green itself.
And it goes both ways. Dedicated hydrogen conferences are now all but commonplace and seem to zero-in on project financiers as attendees, but not insurers. Given the scale (both size and time) of construction which will be involved to get the necessary infrastructure in place, that insurance claims will arise during the construction and start up phases is effectively a given. Insurers will ultimately play a vital role in getting hydrogen projects online so it's great to see the industry responding with products offering the capacity and flexibility which hydrogen projects are expected to need to get off the ground.
As with any new industry, there is an inevitable degree of uncertainty regarding the claims that could lie ahead. With the prospect of such large exposures and the gauntlet laid with a cap of USD 300m per risk, it'll be interesting to see what other insurers propose.
Projects involving the highly flammable gas have often found it harder to find cover, partly because of the complexity and risks involved in production, transportation and storage, and as new and emerging technologies are generally considered riskier.
