Sustainability and Insurance: June Roundup
June 19, 2025
Welcome to our monthly roundup, keeping you up to date on the insurance industry’s most significant sustainability-related news. This month’s topic: Is insurance the answer to energy transition uncertainty?
Read our summary and analysis below.
Analysis
Is insurance the answer to energy transition uncertainty?
It would be naïve to disregard the headwinds facing the energy transition, especially in the United States. Insurers are reliant on ebbs and flows of the real economy, and we have seen the watering down of environmental commitments and sustainability moving down companies’ strategic agendas. The US is leading the pack here; as we discussed in our previous newsletter, Donald Trump has signed several executive orders so far in his second term as President that signal a substantive shift in US environmental policy.
For example, following a halt work order issued by the US government, Equinor stopped the construction of an offshore wind project on the outer continental shelf. One month later, a compromise with the New York State Governor seemed to signal the lifting of the stop-work order for this project, potentially enabling development to continue on the project.
Across the pond in the UK, Ørsted announced the cancellation of its Hornsea 4 offshore wind energy project, citing challenging supply chain costs, higher interest rates and increased construction risks.
This back-and-forth of offshore wind projects is symptomatic of industry uncertainty. Large energy players, as well as their investors, want certainty around these multi-year or even multi-decade projects, and the political climate is making this challenging. As we saw in the lawsuit filed by seventeen states against the administration’s suspension of wind farm leases, billions of dollars already committed are potentially under threat.
Insurance clearly has a huge role to play here. Insurers and reinsurers underpin the energy transition, derisking projects across their lifecycle from conception and application all the way through to operation and decommission.
What makes this especially difficult for all players is the balance between supply and demand. Buyers want insurance for their biggest risks, seeking the highest possible limits and lowest feasible deductibles the insurance market will offer. Insurers and reinsurers, on the other hand, are reticent to offer too much capacity, especially for emerging and unproven technologies and in an industry where profitability has wavered over the last few years.
In our view, insurance can be a key enabler but is not the only factor at play. It is at least partly subject to the same forces of uncertainty in the real economy it relies on.
What insurance can do is take a long-term view of uncertainty. Regardless of political rhetoric, three things have not changed:
1) Renewables in many contexts are becoming more economically viable
2) Energy transition projects benefit from insurance
3) Insurance companies benefit from being a fast mover in this space
We are seeing market leaders recognise this and continue to expand their offering. In the carbon removal space, for example, Lloyd’s recently approved Arto, a specialist MGA insuring carbon removal projects in their earliest stages. Uncertainty is not new for insurance; as we saw with the growth of cyber, emerging insurance markets can take off when a few players are willing to experiment in how they underwrite, especially where historical data are limited.
Insurance might not be the answer to energy transition uncertainty, but it certainly equips transition players to face uncertainty with confidence. A sentiment we heard in the market summarises this well: “there are speedbumps in the road, but the direction of travel is the same.”
Summary
Back and forth with offshore wind
Equinor suspends offshore construction activities for the Empire Wind project (Equinor)
Following a halt work order issued by the US government, Empire Offshore Wind paused the construction of an offshore wind project on the outer continental shelf in New York state. The federal lease for the project was agreed with the US Administration and New York State Energy Research and Development Authority (NYSERDA) back in 2017 and has the potential to provide power for up to 500,000 homes from 2027.
US lifts ban on New York offshore wind project after natgas pipe compromise (Reuters)
One month after construction was halted, the Trump administration lifted the stop-work order on Empire Wind that would enable the developers to resume construction of the $5 billion wind farm project. The lifting of the ban was predicated on a compromise with New York Governor Kathy Hochul that could see the revival of cancelled plans for a new gas pipeline from Pennsylvania to New York. The Trump administration have voiced support for the Constitution Pipeline, which was cancelled back in 2020 following regulatory and legal battles.
Democratic-led states sue to block Trump’s halting of wind projects (Reuters)
At the start of May, a coalition of seventeen states (plus the Washington DC) filed a lawsuit against the Trump administration’s executive order to suspend leases for new offshore and onshore wind projects. Led by New York state, the lawsuit argued that the ban was unlawful because the administration had not offered a detailed justification. It argued that the directive threatened billions of dollars what had already been committed to renewable energy projects.
Ørsted to discontinue the Hornsea 4 offshore wind project in its current form (Ørsted)
Danish energy company Ørsted announced the cancellation of its Hornsea 4 offshore wind energy project in the UK. Intended to produce 2,400 MW of power, the project has faced several challenges, including: increasing supply chain costs, higher interest rates, and increased construction risks. Representing a significant blow to clean energy production in the UK, there are also likely to be significant implications for the insurers involved in the project.
Further delays to CSRD in Europe
Sustainability and due diligence: MEPs agree to delay application of new rules (European Parliament)
Following a vote in the European Parliament, application dates for new EU laws on due diligence and sustainability reporting requirements have been postponed. Member states will have an additional year (until July 2027) to integrate new due diligence rules requiring companies to mitigate their negative impact on people and the planet into national legislation. In addition, the Corporate Sustainability Reporting Directive (CSRD) will be delayed by two years for the second and third waves of companies. As it stands, large companies with more than 250 employees will have to report on environmental and social measures for the first time in 2028.
Market softening for energy insurance
Energy insurance market softens as capacity reaches record highs: Willis (Insurance Business UK)
According to the latest review from Willis, the energy insurance market is continuing to soften, with capacity reaching an all-time high. Following a relatively quiet loss year in 2024, rate reductions are becoming more prominent. Insurers are looking to expand their market share, driving downwards pressure on pricing. The trajectory to market softening is subject to change, however. In the downstream sector, for example, losses in the first quarter of 2025 have already exceeded the total losses from 2024, which is likely to impact insurers’ strategies in the sector. New risks continue to emerge in the transition to clean energy, including supply chain disruptions and safety concerns resulting from new energy storage solutions.
New capacity and partnerships
Artio gets Lloyd’s approval to underwrite carbon projects (Insurance Business UK)
Artio, a new MGA providing insurance for the carbon market, was recently launched with Tokio Marine HCC as its lead capacity provider. It fills a gap in the carbon insurance market as the first insurer approved by Lloyd’s to underwrite carbon projects at their earliest stages. Currently, Artio offer coverage across Afforestation, Reforestation and Revegetation (ARR) projects, as well as biochar carbon sequestration. It has announced plans to expand coverage to direct air capture and enhanced rock weathering technologies later this year.
FM Renewable Energy Launches in EMEA (FM (US))
FM Renewable Energy has expanded its renewable energy policy to cover clients in Europe, the Middle East and Africa. Formed last year, RM Renewable Energy is a division of FM Global focused on research, standards development and risk engineering for utility-scale ground-mounted solar, onshore wind power and battery energy storage systems (BESS). The insurer offers a suite of products and services for renewable energy clients, including climate change impact reports and business risk consulting.
DUAL UK launches Climate Risk & Resilience underwriting team (Insurance Business UK)
Dual UK, an MGA of Howden, have launched a series of new sustainability-focused products supported by a new Climate Risk & Resilience Underwriting team. One of the products underwritten by the new team is Energy Efficiency Retrofit, focused on protecting property asset owners, investors and energy service companies against risks associated with retrofitting building projects.
Willis and TNC launch pioneering wildfire resilience insurance (WTW)
In the wake of the California wildfires earlier this year, Willis and non-profit The Nature Conservancy announced a first-of-its-kind insurance policy accounting for efforts to mitigate the risk of fire. Under this policy, buyers can expect lower premiums and improved availability of insurance if they engage in ecological forest practices, such as tree thinning and planned fires. It was developed for Tahoe Donner Association, a private association of homeowners in Truckee, California, covering over 1300 acres of land and with 39% lower premium and 89% lower deductible than would have been offered without nature-based forest management.
Paratus and Low Carbon agree world-first strategic partnership (Low Carbon)
Paratus, a (re)insurance group dedicated to underwriting energy price risk, have partnered with Low Carbon, a renewable energy provider, offering coverage across their portfolio. Paratus offer an innovative energy price insurance policy, mitigating exposure to adverse movements in energy prices and therefore stabilising revenue streams and improving the credit profile. As a result, insurance helps make renewable energy assets a more attractive investment.
About the author
Anna Gardner is a Consultant at Oxbow Partners who has worked on strategic engagements. She recently supported the design and implementation of a follow-only strategy for a global specialty insurer and writes about sustainability for Oxbow Partners’ publications. Anna has a particular specialism in carbon credits, having previously advised a provider of high-quality carbon credits on their communications strategy and led a delegation to the UN climate change conference at COP27. Anna holds a Masters degree in Geography from the University of Cambridge.
