How Rising Climate Risks Are Reshaping Insurance for Renewable Energy Projects Worldwide

The rapid global expansion of renewable energy is facing a significant hurdle: rising natural catastrophe (Nat Cat) and extreme weather risks are placing unprecedented strain on insurance coverage and project financing. According to GCube Insurance’s 2025 report Known Unknowns, renewable energy developers worldwide are encountering challenges in maintaining insurability and bankability amid increasing climate-driven losses.

Historically, the United States has been the epicenter of Nat Cat-related losses, with hail and wildfire events causing over $300 million in insured damages in some cases. However, the threat has gone global. Europe, the Middle East, and Australia — regions once considered lower-risk — are now experiencing more frequent and severe weather-related claims. Insurers are responding by tightening coverage terms, raising deductibles, and reevaluating underwriting strategies.

These conditions are having a ripple effect on project financing. Lenders are becoming more cautious, with some developers struggling to secure funding when critical perils like flooding are excluded from policies. The report underscores the importance of early engagement between insurers, brokers, and financiers to ensure policies meet lender expectations before construction begins.

To maintain the growth of the renewables sector, the report calls for industry-wide collaboration to improve data accuracy, update Nat Cat models, and enhance project resilience. Without these changes, extreme weather risks could become a critical barrier to achieving global clean energy goals.