Greentech is helping to pave the way to a cleaner, more sustainable future. But with innovation comes risk. If the greentech industry is to unlock its potential as a key player in the fight against climate change, then key challenges must be overcome—starting with its fast-changing landscape of exposures.
Here, insurance has the opportunity to make a real, positive difference. By evolving to meet the demands of emerging green technologies, the sector can give businesses the protection to move forward confidently. Insurance providers are already working to develop innovative products that fill this protection gap, demonstrating our commitment to sustainability and guiding investment into initiatives to scale greentech’s success.
Top 3 greentech exposures
Like any new industry, greentech’s risk landscape is in a state of flux. But key trends are emerging.
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Bodily injury and property damage
Unlike traditional hardware, greentech is often used in power generation, energy management and even complex industrial processes. On top of that, products are sometimes deployed in tough, rugged environments. If a product fails to perform in these kinds of settings, it will likely lead to business interruption or property damage (BI/PD). CFC’s technology cover includes products and services liability with affirmative cover for failure to perform.
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Under-performance
Since many greentech products guarantee efficiency savings, the sector is prone to third-party financial losses if a product fails to perform. This can also lead to a breach of contract between users, legal trouble as well as reputational harm.
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Regulatory action and fines
Shifting regulatory environments, specifically for reporting and disclosing carbon emissions, are creating uncertainty for businesses of all sizes. Although most mandatory disclosure requirements are currently aimed at large corporates, SMEs will face the challenge of similar reporting requirements before long, perhaps affecting the feasibility of technologies or driving up compliance costs.
Appetite shifts: How insurance can fill the protection gap
The traditional energy market is built for big, established players in large-scale energy production. So, when new technologies and innovative ways of creating and distributing energy emerge, they typically get turned away by the technology insurance market.
With greentech set to play an important role in combating climate change, the time to start creating and adapting insurance product is now. This way, we can continue to support the greentech industry as it skyrockets—from green energy and smart homes to carbon inventory software and environmental sensors.
So how is our technology appetite shifting to support this vital industry?
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Green energy
The green energy sector is brimming with companies finding new ways to improve how we generate, store and deliver energy. It’s not just about the power sources themselves—there’s a lot of innovation happening in the design, materials and equipment used to make energy production more eco-friendly. This includes everything from microgrids to nanogrids and beyond.
Risk appetite: We’ve expanded our risk appetite to include companies involved in small-scale energy production. We're open to insuring businesses working on energy generation and supply methods that help reduce or remove greenhouse gases from the atmosphere.
Scenario: A greentech start-up pioneered a micro wind turbine designed for single-family homes and small businesses to generate power. Unlike conventional wind farms with large, towering turbines, these compact, vertical-axis turbines can be installed on rooftops or in small outdoor spaces, making wind power feasible for urban or suburban settings.
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New material technologies
Environmentally friendly materials are going to be key in making all manners of projects more sustainable—from sustainable materials for solar panels and wind turbines to bio-based composites for electric vehicles.
Risk appetite: Our appetite has grown to include companies providing technologies to create environmentally friendly materials. While lots of materials can fall into this category, we only consider new materials applied into tangible technology products, and wouldn’t cover new replacements for materials such as rubber or cement.
Scenario: A solar energy company integrated graphene into solar cells to make them more durable and efficient. This kind of breakthrough technology not only boosts green energy production but also reduces the overall environmental footprint of the manufacturing process.
Getting started with greentech
As the industry accelerates, small- to medium-sized greentech businesses are set to play a critical role in developing low-carbon technologies. Insurance occupies a unique position to provide a method of de-risking these important projects—and so help drive the transition to a low-carbon economy.
Get in touch with our technology team to learn more about the greentech market, it’s unique risks and how CFC is evolving to provide cover.
Looking for key background informaion on the greentech industry? This article's for you.
For more ways insurance can support the drive for sustainability, check out carbon insurance.
