A Reinsurance Roadmap for Navigating the Energy Transition

June 23, 2025


June 23, 2025 8 mins


A Reinsurance Roadmap for Navigating the Energy Transition

A Reinsurance Roadmap for Navigating the Energy Transition


The energy landscape is rapidly changing, presenting the reinsurance 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.

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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


Quote icon


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.

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:


  • 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.






  • 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.

1Clean energy transitions continue to accelerate, but progress is uneven, IEA
2Global Economic Outlook, IMF
3New 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.


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.


The contents herein may not be reproduced, reused, reprinted or redistributed without the expressed written consent of Aon, unless otherwise authorized by Aon. To use information contained herein, please write to our team.



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