August 7, 2013
U.S.

Wind insurance claim analysis reveals need for monitoring

David Appleyard, Chief Editor, Renewable Energy World | August 06, 2013 | www.renewableenergyworld.com

Claims for blade damage and gearbox failure top the table for U.S. insurance payouts, according to a new analysis from GCube.

Using data based on reported claims in the U.S. for 2012, the analysis shows that blade damage and gearbox failure account for the greatest number of losses – accounting for 41.4 percent and 35.1 percent of the total claims reported, respectively.

Meanwhile, damage to generators (10.2 percent) and transformers (5.1 percent) ranked third and fourth in the report, with damaged to foundations coming in fifth in terms of claims volumes.

Although the majority of wind turbine blade damage can be attributed to lightning strikes, delamination and improper handling during the construction and installation phase are also frequent and need to be addressed.

Poor maintenance contributes significantly to the leading cause of gearbox failure, with design defect factoring into loss frequency as well.

Considering the costs associated with insurance claims, gearbox claims typically cost the industry US $380,000, while turbine blade claims cost on average of $240,000 per claim.

Claims associated with the wind turbine foundations are typically higher, averaging $1,300,000, and rose to $2,500,000 in exceptional circumstances throughout 2012.

The average claim cost for repair or replacement includes business interruption and all other related fees and expenses before the insured’s deductible has been applied.

“We will continue to share our claims data and analysis in order to educate our insureds and the U.S. wind energy industry in order to support efforts that improve reliability and maintenance practices within the community. We understand and appreciate the need to reduce the overall cost basis for operating a wind farm and believe that our data highlights the need for condition based monitoring and other proactive measures.” said John McLane, president of GCube Insurance Services Inc.

McLane added: “That monitoring is especially critical for turbine gearboxes as that component experiences the greatest engineering stress and up tower repair considerations.

“While the industry can do little to reduce the risk of lightning strikes, we are pleased to see some of our insured working with manufacturers and operations and maintenance (O&M) providers to add blade assurance programmes to their maintenance agreements that cover the repair or replacement of a blade damaged by lightning in light of the frequency of this natural occurrence.”

The research also reinforces the belief that turbine durability and implementation of effective O&M programmes are needed for the U.S. wind community to thrive. Report authors note that the top two most frequently reported causes of loss were cited as poor maintenance (24.5 percent) and lightning strikes (23.4 percent). Design defect (11.5 percent), wear and tear (9.3 percent) and mechanical defect (6.2 percent) featured in third, fourth and fifth positions when it came to assessing and understanding the reason cited for the initial claim.

Industry standards define a “design defect” as a fault that is inherent in the design of the product itself. A “mechanical defect” is a more generic term for a mechanical flaw and/or malfunction. This includes, but is not limited to, a material defect that would prevent the equipment from functioning as designed, such as metal fatigue, failure and blade delamination.