Geothermal Insurance & Risk Management

Geothermal energy resources have been utilised for electricity production since the middle of the 20th Century and the technology, whilst having evolved over this time, is well established and understood.

Rather like the oil industry, the exploration and development phases pose the greatest risks to project owners, both financially and technically. Similarly, the location of geothermal plants has been driven largely by geology resulting in a diverse geographical footprint.

Geothermal projects are inevitably located in areas of significant seismic activity but the political risk profile and wider natural perils environments vary markedly between project sites. Nevertheless, its low carbon credentials and ability to enhance national energy self-reliance are driving an accelerating growth trend.



JLT has long-standing experience working with geothermal electricity plants. Particular characteristics of the technology and typical challenges include:

  • Political risk issues associated with some territories
  • Environmental considerations, primarily associated with the drilling and operation of geothermal wells
  • Inherent exposure to earthquake due to plant locations in seismically active regions
  • Frequent requirement for control of well coverage, especially during the exploration and development phases of the geothermal field
  • Importance of robust operations and maintenance procedures (geothermal fluids often corrosive and also cause mineral build-up requiring wells, pipelines and equipment to be suitably maintained)
  • Phased development of plants may require careful integration of older and newer plant and equipment.

We also have a growing portfolio of clients that provide municipal heating systems based around ground-source heat pump technology.

This has much wider geographical potential given that it is tied to seismically active locations.

Insurance solutions

Core insurance products that can be provided across the whole project development and operational cycle include:

covers physical damage to cargo whilst in transit by sea, typically from manufacturers or suppliers facilities

covers lost revenue arising from delayed commissioning of a project itself caused by delayed delivery of project equipment following loss of marine cargo

covers the cost of controlling a well ‘blowout’, pollution clean-up and redrilling costs

covers physical damage to the project works

covers lost revenue arising from delayed commissioning of a project itself caused by a physical damage loss to the project works

covers physical damage to the operational asset

covers lost revenue arising from a physical damage loss to the operational asset

cover legal liability arising from damage to third party property or injury to third parties arising from a physical damage loss at the project whilst under construction or the operational asset

covers physical damage and any related revenue loss to either during the construction or operational phase caused by an act of sabotage or terrorism

Supplementary coverages include:

covers legal liability for clean-up, habitat restoration, bodily injury and property damage arising from pollution

can cover arrange of perils such as expropriation, political violence inconvertibility of local currencies and even acts of terrorism and war

cover purchased by manufacturers of equipment or installers of renewable energy systems to back-up warranties and commitments that they in turn provide to buyers and customers

Our clients also receive the benefit of broad, lender-compliant, policy wording which we regularly review and update to ensure that we continue to offer the broadest cover generally available in the market.

The policy is designed to encompass all of the core insurance coverages associated with the project development and operational cycle noted above.



We have has extensive international experience of providing insurance placement and advisory services to developers, asset owners and other key stakeholders, such as project financiers.

Our clients frequently engage us during the development phases of a project.


This ensures that we can provide guidance on insurance programme design well in advance of placement and take full account of insurance requirements that may be specified by lenders and other key stakeholders.

This also provides the opportunity to challenge on behalf of our clients any especially onerous requirements that such stakeholders may seek to impose.

Case Study

Major expansion to existing geothermal plant

Our client had acquired a relatively small (<20 MW) existing plant with the intention of further developing the geothermal field. This included drilling new production and re-injection wells, constructing a new 60 MW ‘flash’ plant with a supplementary 20 MW binary plant and integrating the control systems of both. The project was to be the largest of its type in the country at the time and developed with the support of project financing.

From an insurance perspective insurers were keen to understand the implications of the reconfigured control systems and potential for incidents occurring in the old plant affecting the new plant and vice versa. Logistics of a phased handover of the main flash and binary plants from construction to operational insurance covers also came under review.

Inevitably, the project location was also significantly exposed to earthquake risk and more moderately so to flash-flood events.

Our team members were able to respond to the challenges posed by the project in a number of ways:

  • Close liaison with colleagues specialising in major civil engineering construction projects familiar with interdependency / integration / handover issues
  • JLT obtained detailed project schedules and works methodologies to provide assurance to insurers around project phasing and handover issues
  • Engineering survey arranged with lead insurer at the 75% project completion stage balancing a meaningful assessment of works completed with a scheduling review of outstanding works
  • Extensive and early intermediation between all key stakeholders
  • Working closely with in-country broker partner.

In combination these measures and capabilities minimised the frictional challenges faced by our client to the insurance aspects of the project.

Claims management

In the unfortunate event of a loss, we have a specialist team of claims personnel who have deep experience in dealing with large and complex claims across every segment of the renewable energy industry.

We act proactively to manage the claims process and the other stakeholders involved such as lead underwriters, follow markets and loss adjusters. The team has heavy involvement in the claims process whether this is regarding interim payments, the appointment of specialist experts or site visits.

Our claims team have strong relationships with the leading loss adjustors around the world and are able to recommend the best resources to ensure that our clients’ claims issues are managed by people that understand their business.

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