OPINION: NOWIC - the ‘new standard’ for Offshore Wind Insurance
By LUKAS CARBOL - Claims Manager
A milestone for the offshore wind sector and the insurance community was reached yesterday (November 3, 2025) with the official launch of the Nordic Offshore Wind Insurance Conditions (NOWIC).
Developed through a unique collaboration between the Nordic Association of Marine Insurers (Cefor), the Nordic Shipowners’ Association, and Equinor, NIORD believes that NOWIC will become a solid option for insurance of offshore wind.
The Nordic tradition: collaboration and balance
NOWIC is not just another set of insurance clauses - it is the product of the “Nordic tradition” of agreed insurance conditions. This tradition that stretches back to the 19th century and underpins the widely respected Nordic Marine Insurance Plan (NMIP) The NMIP is renowned for its balance resulting from being negotiated by a committee representing both insurers and assureds, with input from legal experts and practitioners. This approach ensures that the final agreed document is not only fair and practical, but also dynamic; they are regularly updated to reflect technological and market developments.
NOWIC follows this model. Its wording and commentary were drafted and agreed upon by a committee including representatives from Cefor, the Nordic Shipowners’ Association and Equinor. The process included legal scrutiny, industry hearings, as well as the involvement of brokers and claims experts. The result is an “agreed document” that aspires to serve the interests of all parties - insurers, operators, contractors and the wider offshore wind community.
Building on proven foundations: the NMIP and agreed document approach
At its core, NOWIC is built on the foundation of the NMIP 2013 (Version 2023). The NMIP’s “General Part” provides comprehensive, time-tested rules for marine insurance. NOWIC adopts these as its starting point, modifying and supplementing them where necessary to address the unique risks and structures of offshore wind projects.
This means that users of NOWIC benefit from a system that is already familiar to much of the Nordic and international marine insurance market: a clear and consistent wording, a coherent structure, plus a deep portfolio of case law and commentary. The “agreed” nature of the document ensures that it is not simply a set of insurer-imposed terms, but a balanced framework reflecting the needs and realities of all stakeholders.
Key principles and structure of NOWIC
All-Risks Principle and Scope
NOWIC adopts an “all risks” approach: unless a peril is specifically excluded, it is covered. This provides broad protection for assureds, with exclusions clearly set out for war risks, state interventions, malicious acts, insolvency, and certain nuclear and chemical risks. The scope of cover is further refined through the use of safety regulations and the possibility of supplementary covers.
Construction and operational risks
NOWIC provides seamless coverage from the construction phase through to operation. Insurance during the construction phase covers all activities from early project studies to completion, including the operation of completed units prior to full project handover. Once construction is complete, insurance during the operation phase takes over, covering maintenance, repairs, and modifications, with no gaps in protection.
Covered activities
A windfarm will inevitably require maintenance and may suffer damage during its lifetime. Under NOWIC, such activities are naturally covered as part of ordinary operation. This is an innovative approach compared to the current practice, where some of these activities require the assured to purchase a separate CAR policy. Such an approach reduces administrative burden and overall insurance costs.
The role of the commentary
A unique feature of the Nordic system carried over into NOWIC is the integral role of the commentary. The commentary is not merely explanatory - it is an agreed part of the conditions, providing authoritative guidance on the interpretation and application of each clause. This enhances clarity, reduces the risk of disputes, and ensures that all parties share a common understanding of their rights and obligations.
Main topics and issues addressed
The “unit” concept
A key feature of NOWIC is the “unit” approach, where units form the ultimate limit of an insurer’s liability per single casualty. Rather than insuring the wind farm as a single large asset, NOWIC divides the project into functional units: wind turbines (including foundations, moorings, and inter-array cables), offshore and onshore substations (with export cables), and other key components. Each unit is assigned an agreed value and coverage is structured to allow for clear limits and flexibility in addressing partial losses, total losses and unrepaired damage. This “bottom-up” structure ensures that coverage is both comprehensive and adaptable to the realities of complex offshore wind projects and claims arising therefrom.
One of the key aspects where NOWIC appreciates practical challenges of the industry is the structure of the units’ “‘agreed value”. In most cases, costs of repairing damaged assets in offshore wind will exceed their CAPEX values. By aggregating respective components into units of the same type, the concept provides a robust sum-insured available to the assured for any casualty. In addition, the “agreed” element of the value adds an additional layer of contingency if needed.
Measures to avert or minimize loss
Other conventional conditions subject the equivalent of costs of measures to avert or minimize loss (e.g. sue & labor) to a specified sub-limit. NOWIC implements a principle well-established in Nordic marine insurance, which rests on a simple rationale: it is more efficient and economical to support the assured in containing the costs of damage than to wait for a full-blown loss. Therefore, in addition to the sum insured for each unit, the assured may access an equivalent amount specifically for loss prevention or mitigation measures. In practical terms, this means the assured can spend up to the full value of the unit to avert or minimize loss - often far exceeding the amounts available under traditional sub-limits. Furthermore, these costs are not subject to a deductible, underscoring the preventive intent of this approach.
Defects and serial losses
Defects are a major source of claims in offshore wind. NOWIC addresses this topic with a flexible and transparent approach. It implements contractual solutions well recognized by industry, which have been refined and adapted to correspond to the Nordic tradition of insurance conditions.
Default cover for damage due to a defect with options to limit or exclude cover
The main modernization of the current insurance standards related to defects is the introduction of a default alternative, reflecting the Nordic tradition of providing broad cover unless specifically limited. Damage arising from defects will thus be covered, unless either Option I or Option II are explicitly agreed in the insurance contract.
Default (LEG 3 equivalent): Cover for damage caused by a defect, including the damaged defective part, less any betterment.
Option I (LEG 2 / Welcar defective parts clause equivalent): If specifically agreed, cover can be limited so that the costs of renewing or repairing the defective part itself are not covered.
Option II (LEG 1 equivalent): If specifically agreed, all loss or damage resulting from a defect can be excluded.
Serial Defect Limitation
Another alternative to manage risk related to defects is a serial defect limitation clause. This provides insurers with another tool to limit their liability in case of damage to several units resulting from a serial defect. Similar to the options to limit or exclude cover for defects, the adapted solution recognizes well-established practice whilst reflecting lessons learned from previous market wordings.
Supplementary covers
NOWIC includes a dedicated section for supplementary covers addressing additional risks usually subject to sub-limits. Instead, insurer’s liability in NOWIC is defined by a sum insured which needs to be agreed for each supplementary cover such as repositioning, weather-related repair costs, wreck removal etc.
With a separate sum insured, supplementary covers are not subject to deductibles agreed for other sections. Therefore, unless specifically agreed, supplementary covers are not subject to any deductible.
Delay in Start-Up and Business Interruption
NOWIC provides comprehensive cover for loss of revenue, both during construction (delay in start-up and initial business interruption) and operation (business interruption). Compensation can be calculated on the basis of actual lost revenue (e.g., lost MWh multiplied by market price) or, if agreed, on a fixed-daily-amount per turbine. The latter alternative further caters for either insurance of the estimated full loss per day, or only parts of the revenue to cover - for instance - fixed costs and debt servicing.
The system allows for partial losses (e.g. reduced capacity) to be compensated proportionally and includes clear rules for deductible and indemnity periods. The insurance includes cover for expediting expenses and other extraordinary costs incurred to avert or minimize loss.
The Nordic approach in practice
Standardization: a way to reduce costs by enhancing certainty
Much has been said about the need for standardization across the entire supply chain if offshore wind industry is to succeed. With insurance being part of this equation, NOWIC has been designed as an effort to contribute to standardization of offshore wind insurance.
One of the core objectives of NOWIC is to reduce frictional costs. By providing a common, well-understood set of conditions developed by reaching a compromise between operators, contractors and insurers, NOWIC aims to streamline the placement and claims process. We believe that this will contribute to reduction of the time and costs of settling claims and will reduce the risk of disputes.
The clarity provided by the commentary, sustainability of the exposure management brought by the unit-based structure, and the comprehensive and consistent framework, all contribute to a more predictable and efficient insurance of offshore wind. This, in turn, we believe will support the continued growth and competitiveness of the entire industry.
Conclusion: a good alternative for offshore wind insurance
The launch marks a significant milestone of efforts of many insurance professionals who have contributed during drafting of NOWIC. The result is a document built on the Nordic tradition of collaboration, clarity and balance. By offering an efficient and sustainable framework for insuring offshore wind projects, we believe that NOWIC may be a welcomed and good alternative to the conditions used in the market today.
Reach out!
As an active participant in the drafting of NOWIC, NIORD warmly invites all stakeholders and industry professionals to reach out to us should you wish to discuss how we can support you in considering NOWIC for the insurance of offshore wind projects.
For access to the full wording and commentary, visit Cefor at www.cefor.no
https://cefor.no/clauses/nordic-offshore-wind-insurance-conditions/
Author
Lukas Carbol
Claims Manager
lukas.carbol@niord.com
+47 989 92 873