Interview With An Underwriter 3w2x1p

INTERVIEW WITH AN UNDERWRITER – ALCACERES Within North America, GCube has made significant progress in developing robust insurance strategies to developers, investors and project owners that are contending with how best to safeguard those turbines that are part of ageing fleets. We sat down with Head of Underwriting for the US, Al Caceres, to find out more about this rapidly expanding area of the wind energy insurance market. 1. Within North America alone, tens of thousands of turbines are coming out of warranty in 2013. What primary challenges does this present to owners, operators and investors? Fundamentally, the biggest challenge here is associated with confidence. Owners, operators, and investors inevitably feel a lot more comfortable when they see a manufacturer or associated third party stand behind the turbine. Once that warranty expires, you suddenly enter a grey area because potential risks and costs can escalate and there are a great deal more unknowns. Are there going to be replacement parts, for instance? Is the manufacturer going to be in business in the future for servicing and repairs? For owners, operators, and investors, these risks and variables can create significant headaches. Whereas at one time warranty products were viewed as the ultimate safeguard, these industry comforts are coming to an end. From an insurance perspective, there is a fine balancing act that needs to take place – ensuring that we are comfortable writing the risk, while at the same time keeping the and conditions and policy wording as it should be. 2. Are you seeing situations where people are challenged when trying to find replacement parts?

We are starting to see situations where third party manufacturers are being forced to supply replacement parts. This has a subsequent impact on the supply and quality of parts available and will affect future warranty and insurance options. 3. In light of this, how are you working with the wind industry to help tackle these challenges? We’re working with the wind industry in three very clear ways. First, we are helping our brokers and their insureds to identify and prepare for the expiration of their turbine warranties. Second, we are helping them to understand and assess whether there are any viable alternatives and how they really stack up – particularly when a manufacturer offers to extend any existing agreements. Third, our loss control and technical services team is working with manufacturers to identify and understand what key components will most likely fail and advising owners and operators accordingly. Ultimately, if an existing turbine manufacturer warranty has expired, the comfort and security that they have previously instilled has changed and this has an inevitable impact on the future evolution of our policies on offer. 4. To what extent does operations and maintenance help to reduce the costs for owners and operators managing existing wind farm portfolios? Operations and maintenance is critical to the future success of the renewable energy market. Its importance within the wind and solar energy sectors has increased incrementally over the past few years and it is almost impossible to overstate. This growing importance has been built on an increased need to properly maintain and service equipment and to ensure that it meets the necessary industry standards.

However, it is also important for owners and operators to stay on top of equipment maintenance, to implement regular scheduled shutdowns and to identify and track issues and faults throughout its lifecycle. It is worth ing that while we saw an uptick in construction in the final quarter of 2012, everyone is expecting a much slower market in of new turbines coming online throughout 2013 and conversely, this will have a considerable impact on future O&M. Al Caceres, Senior Vice President, Head of Underwriting As Head of Underwriting for the US, Al manages the team of underwriters for GCube Insurance Services, Inc. handling all of the risks written for North America. Prior to ing GCube, Al was a Senior Property Underwriter with AEGIS Insurance Services responsible for underwriting operational and construction projects for power and utility, oil/gas, petrochemical companies and renewable energy projects including wind, solar and ethanol plants. Previously, Mr. Caceres worked at AIG – World Source Property as Assistant Regional Manager and at Starr Technical Risks Agency Inc. as Senior Property Underwriter. He began his career at Marsh as a Risk Analyst in the Power and Utilities Division. Mr. Caceres has a Bachelor of Science in Education from Manhattan College and served in the United States Marine Corps.