Launch of Insurance Value Re-evaluation and Quantitative Earthquake Risk Assessment Services for Offshore Wind Farms

Sompo Japan Insurance Inc. (President: Koji Ishikawa, hereinafter "Sompo Japan") and SOMPO Risk Management Inc. (President: Yoji Nakajima, hereinafter "SOMPO Risk") will launch services to re-evaluate the insurance value of offshore wind farms and to quantitatively assess earthquake risks starting from April 2026.

1. Background

In recent years, due to global inflation, the cost required to rebuild or re-procure components of offshore wind farms such as turbines, submarine cables, and substations may have diverged from the costs at the time of construction. As a result, challenges arise in insurance design and risk management, such as the adequacy of the insured amount in the event of an accident and fluctuations in the maximum foreseeable loss for the business, which is calculated based on the insured amount. To respond to these changes in the market environment, Sompo Japan and SOMPO Risk will offer an "Insurance Value Re-evaluation Service" to review the insurance value of offshore wind farms to the latest standards.

Furthermore, Japan's unique natural disaster risks are becoming increasingly important in the risk management and insurance design for offshore wind power projects. In addition to the conventionally assessed risks of typhoons and lightning, we have newly developed an assessment model specialized for earthquake risks for offshore wind farms. By quantitatively assessing natural disaster risks, we will support businesses through more rational insurance design.

2. Overview and Features of the Services

(1) Insurance Value Re-evaluation Service

In this service, we will calculate the insurance value for the main equipment of offshore wind farms, including not only the price of the main equipment itself but also material costs, labor costs, and other expenses required for re-installation.

The calculation will reflect inflation indices, international equipment unit price data, exchange rate trends, and changes in tax systems to provide an evaluation based on the current market environment. By partnering with KROLL*, which has a global track record in evaluating offshore wind farms, and combining their expertise with that of Sompo Japan and SOMPO Risk, we will achieve a highly reliable evaluation.

This will enable the setting of appropriate insurance values, limits of liability, and deductibles, as well as the evaluation of the maximum foreseeable loss during the operational phase, thereby providing more appropriate insurance design.

*KROLL is one of the world's leading asset valuation firms, with numerous achievements in evaluating energy infrastructure, power generation facilities, and marine structures.

Kroll website: https://www.kroll.com/en

Overview of energy sector valuation services: https://www.kroll.com/en/services/fixed-asset-advisory/fixed-asset-energy-practice

[Service Provision]

(2) Quantitative Earthquake Risk Assessment Service