Insurance, Risk Management, and Energy in Transition

This chapter examines the diversity of insurance coverages available for fortuitous risks associated with large and innovative energy projects. It analyzes the ways insurance underwriters determine the pricing of their coverages, sometimes providing the insured with bargains and sometimes carefully matching the risks to the premiums to the extent that uncertainty allows. The chapter discusses the application of risk-management techniques as an approach capable of facilitating otherwise unviable projects by identifying, evaluating, and eliminating or modifying risks. It is concerned with the possibility that the functioning of the insurance industry may in some instances influence the selection and viability of new energy projects. Most of our personal experience with insurance is with familiar risks that are easily comprehended and treated in standard fashion. The risk-management technique originated in the United States at the turn of the century and has grown continually more scientific.