Insurance Companies Find There Is Money to Be Made in Green Technology |

Munich Re: Main Building with ornamental court...
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Especially during the current economic client, capital investments are difficult for companies to rationalize. But investments in green technology are getting some much-needed support from insurance carriers based upon risk modeling from experts such as Dr. Nikolaus von Bomhard, chief executive of Munich Re, according to the New York Times:

Insurance, he argues, can play an important ?pace-making? function, helping accelerate the adoption of green energy by assessing, quantifying and spreading risk.

?A performance warranty creates a liability on a company?s balance sheet,? explained Christian Scharrer, a risk analyst with the unit. ?Most companies don?t have the capital structure to keep it on their own balance sheet,? he said, let alone pay out a hefty claim.

?Insurance can support the modernization of economies and societies by encouraging the development of new technology and enhancing innovation,? he said at a recent panel discussion on climate change at the Shanghai Expo.

The task of crunching the numbers and pricing new green insurance products falls to teams of mathematicians, engineers, physicists, lawyers and other analysts in groups like Munich Re?s special enterprise risk unit. In 2007, they were asked by a solar panel manufacturer to come up with some insurance that would backstop the 20- or 25-year warranties that prospective customers were demanding.

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