It’s always a little bit of a marathon at events like RISKWORLD, but in the best way possible. You’re bouncing between sessions, grabbing coffee, and trying to soak up as much as you can. In the middle of all that, I got the chance to sit down and chat with Clifton Chan, a property engineering underwriter over at Munich Re.
We were supposed to talk about big, complex risks in the power industry, and we definitely did. But what struck me was how often our conversation came back to the simplest, most human things. It’s a great reminder that even in a world of multi-billion dollar power plants and cutting-edge tech, it’s the fundamentals that really matter.
So, grab a coffee, and let me share some of what I learned. It might change how you look at insuring energy risks.
When Does an Old Power Plant Become a Bad Risk?
You see it all the time—our country's power infrastructure is aging. So, I asked Clifton, at what point does an underwriter look at a facility and say, "This is just too risky at a normal price?"
His answer was refreshingly straightforward. It’s not about a specific age or a magic number. It all comes down to one thing: maintenance.
He explained that Munich Re is a very technical-focused company. They want to see the reports. They want to see the test results. Are you staying on top of your scheduled maintenance, or are you pushing it off? With the huge demand for power right now, it’s tempting for facilities to just keep the machines running and defer that critical work. But for an underwriter, that’s a massive red flag. Those deferred maintenance schedules are basically ticking time bombs.
How Do You Insure Something That's in a Hurricane's Path?
We’ve all seen the images of what a major storm can do, especially to coastal areas. This is a huge deal for renewable projects, like offshore wind farms, that are built right in the line of fire. I was curious how underwriters can tell the difference between a resilient project and one that’s just waiting for a disaster.
Clifton brought up Hurricane Sandy as a major turning point, especially in the Northeast. After that storm, it wasn't just insurers pushing for change. Local governments and states started demanding that utilities "harden" their assets.
What does that look like in the real world? It means literally lifting critical equipment up above the flood zones. It means building protective walls and installing heavy-duty, watertight doors. It’s a huge investment, but the thinking has shifted. A community simply can’t afford to be without power for a week anymore. So, when they see a project that has genuinely invested in this kind of storm hardening, it tells a much better story from a risk perspective.
The Big Worry with Big Batteries
Everyone is talking about battery energy storage systems (BESS). They’re a key piece of the green energy puzzle, but they also give underwriters a whole new set of things to worry about.
What's the number one concern? According to Clifton, it’s the trend of installing them indoors. He painted a picture that’s pretty easy to visualize: someone takes a big, empty warehouse and just starts filling it with rows and rows of batteries. The problem? If one of those batteries fails and starts a fire, the whole facility could go up in smoke. There’s no separation, no containment.
What they like to see is a completely different setup. Think of those big shipping cargo containers. When batteries are housed in individual, containerized units with proper separation between them, a failure in one doesn't automatically become a catastrophe for the entire site. It’s a simple concept, but it makes a world of difference in the risk profile.
The Most Important "Innovation" Isn't What You Think
I asked Clifton what single engineering innovation he thinks will have the biggest positive impact on lowering risk in the next five years. I was expecting to hear about some new sensor or a fancy AI-powered monitoring system.
His answer surprised me. "Staying on top of scheduled maintenance," he said. "That's the biggest thing."
He was candid, saying that a lot of the losses they see come down to the human element. Someone misses a step in a procedure. Someone presses the wrong button by accident. It happens. The best "innovation," then, is simply having robust processes. It’s about paying attention to best practices, learning from near-misses, and—this is key—sharing that information across all of a company's locations so the same mistake doesn't happen twice.
Why Do Projects Get Rejected? It's About the Whole Story
Sometimes, a project just can't get coverage. Is it because it's in a bad location, like an earthquake zone? Is it because the technology is too new and unproven? Or is it because the company building it is on shaky financial ground?
The answer is yes... to all of the above.
Clifton explained that it’s never just one thing. The underwriting process looks at the entire picture. They consider:
- The client and their history
- All the stakeholders involved
- The project's loss history (if any)
- The engineering and technical details
- And, importantly, the client's historic willingness to work with their insurers
As he put it, "it should tell a good story." If parts of that story don't add up or there are too many red flags, that’s when an underwriter has to pass.
What an Underwriter Really Looks for On-Site (Hint: It’s Not Just the Wires)
This was my favorite part of our chat. I asked him about the biggest misconception energy developers have about what underwriters do during a site visit.
He laughed and said, "I'm not an engineer by trade." He relies on his engineering colleagues to dive deep into the technical specs. What he focuses on is completely different: the people and the general environment.
He looks at the housekeeping. Is the place clean and organized, or is it a mess? He even mentioned looking for something as simple as cigarette butts right outside a door, which can signal a lax attitude toward safety rules.
He shared a fantastic story. He was just telling someone that the way cars are parked in the employee lot can be a major risk indicator. Why? Because if there's an emergency at the plant, people need to be able to get in their cars and leave immediately. If the parking lot is a chaotic mess where cars are blocked in, it points to a lack of planning for the worst-case scenario. It’s those little, human details that often tell the biggest story.
So, What's Next? A Look at Nuclear's Comeback
As we wrapped up, I asked him what he sees on the horizon. His eyes lit up when he talked about nuclear power.
He thinks it’s going to be fascinating to watch how the nuclear shift evolves over the next 5, 10, even 20 years. We're seeing old plants being repowered and new ones being built with small modular reactors (SMRs). It’s happening right now in the U.S. and Canada.
It’s clear that many people in the industry, underwriters included, are looking at this next generation of nuclear as a potential future for reliable, stable power. It’s a space we’ll all be watching closely.
Talking with Clifton was a great reminder that our industry, for all its complexity, is built on relationships and common sense. It’s not just about the data and the dollars; it's about the people, the processes, and the story a risk tells. And that’s a lesson that never gets old.
