Operating All Risks

Operating All Risks (OAR) insurance provides coverage for physical damage sustained during the operational phase of an offshore wind farm, typically renewing at annual intervals throughout the life cycle of the farm.

Normally, the first 12 months of OAR insurance can be packaged together with the CAR placement so as to confirm a continuity of the insurance panel, as portions of the completed wind farm move from CAR to OAR, until all completed insured assets come onto the OAR policy.

Risks

During operations, the risks can be mostly of an “existence” nature, and relevant questions to ask can include: (1) whether the farm is situated in a natural catastrophe (NATCAT) exposed area, (2) whether the farm is situated in a heavily marine trafficked area, (3) whether the OAR insurance remains tasked with also insuring the transmission assets linking the electricity produced by the wind farm to the onshore grid, and/or (4) whether the insurance company is also heavily exposed on this wind farm, and many of the nearby offshore wind farms such that there is a genuine portfolio risk of geographic aggregation. Like CAR insurances, OAR insurances may also offer certain additional coverages.

Issues

It will be key to consider other issues such as whether any warranties remain in place from component manufacturers, the availability of spares and whether the various components used within the wind farm are still rolling off assembly lines or are largely obsolete, and whether there is sufficient suitable nearby tonnage (or in the case of floating offshore wind farms, suitably nearby tugs and ports and terminals infrastructure) so as to be able to effectuate repairs in an efficient manner. 

As these wind farms age, the risks may change and the opportunities to repair and replace may become more limited.