As renewable energy projects scale and electricity grids come under pressure, captive insurance is moving from a niche tool to a strategic capital platform. AXA XL’s Global Head of Energy Transition, Vicky Roberts-Mills, and Head of Captives and Facultative Underwriting for APAC and Europe, Marine Charbonnier, discuss how businesses can use captives to de-risk infrastructure investment, unlock capacity and support the long-term transition to low carbon power.
How is the risk landscape changing for energy infrastructure investors?
Vicky Roberts‑Mills: We’re seeing a structural shift in where capital is being deployed. Investment in renewables remains vast, but it’s no longer just about generation. Focus is moving toward transmission and distribution – the systems that allow renewable power to move reliably from source to consumer.
At the same time, grid congestion, policy uncertainty and tighter project margins are putting pressure on project economics. Electrification of homes and transport, data centre growth and decarbonisation commitments are all driving electricity demand. That’s creating more complex risk profiles across the value chain.
In this environment, just saying ‘buy insurance for that’ can be counterproductive. If every risk is transferred to the commercial market because lenders require it, the cost of insurance can start to undermine the viability of the project. The question becomes which dollars of risk should be transferred, and which are more efficient to retain?
Where does captive insurance fit into this changing landscape?
Marine Charbonnier: Captives are increasingly sitting at the intersection of insurance and finance. They’re evolving from traditional risk‑financing vehicles into strategic capital platforms.
For renewables developers – who are typically more debt‑leveraged and operating on thinner margins than traditional energy majors – captives can remove some of the volatility from programmes, smooth earnings and provide long‑term balance sheet protection. They create a framework to blend different sources of capital and align insurance purchasing with lender requirements.
Marine, you’ve said captives are there to complement, not replace, the commercial market. What do you mean by that?
Marine Charbonnier: Captives are not a pure alternative to the commercial market; they are meant to complement it. The optimal structure depends on the risk profile and the maturity of the technology.
For standard construction and operational risks, a traditional placement might be appropriate. For emerging technologies, or areas where market appetite is limited – for example, prototype battery storage or floating offshore wind – a captive can absorb part of the early‑stage risk. That can unlock follow‑market capacity and make projects insurable.
We’re also seeing more structured and parametric solutions around captives, particularly for non‑damage business interruption, such as lack of sun or wind. In some cases, dedicated retrocession on a multi‑year basis is used to protect the captive’s capital and support long‑term infrastructure investment.
"Captives are not a pure alternative to the commercial market; they are meant to complement it." – Marine Charbonnier
What practical advice would you give businesses considering a captive for infrastructure or renewables projects?
Vicky Roberts‑Mills: First, think holistically across the value chain. Where do the risks actually sit – in generation, grid connection, infrastructure, or revenue volatility tied to weather? And how are those risks shared across stakeholders?
Second, bring the captive into the conversation early. Too often, insurance is treated as a late‑stage procurement exercise that responds to lender checklists. There is value in thinking earlier about the risks, their financial consequences and how they can be allocated or shared. That’s where risk consultants and engineers can add real value. Early engagement with insurers’ risk consultants creates an opportunity to ‘engineer out’ risks further along the project lifecycle.
Third, consider margins. The returns in renewables are generally lower than in traditional energy. If you’re transferring everything to the market on a one‑year basis, the cost can quickly become unsustainable. A captive allows you to retain more efficiently priced layers and use commercial capacity where it’s most effective.
Marine, what about the more technical or structural considerations?
Marine Charbonnier: A few points stand out:
- Be clear on risk allocation. As soon as you have multiple stakeholders within a single book of projects, it becomes more complex to determine where the risk sits and who is responsible. The real preparatory work in involving a captive is in legal and governance, creating clarity around which risks each party assumes and to what level.
- Plan for the long term. Energy infrastructure often requires coverage over several decades. Captives need the ability to offer long‑term support, sometimes backed by multi‑year retrocession, rather than relying solely on annual renewals.
- Use analytical work up-front. For parametric covers or emerging technologies, preparatory analytics are critical – gathering multiple data sets, assessing natural hazards and understanding where historical data is limited. We are seeing captives work with climate and risk consultants to close the gap between real‑world impact and the policy formula.
- Structure for optionality. Some organisations establish dedicated renewable‑focused captives or cells for specific asset classes like solar, wind or storage. This allows them to build underwriting experience and performance data before integrating those exposures into a broader captive portfolio.
How do parametric solutions change the conversation for captive owners?
Vicky Roberts‑Mills: Parametric insurance can be highly compelling when viewed through a capital and finance lens. It pays out when predefined triggers are met, rather than indemnifying actual loss, which can support liquidity and reduce claims friction.
However, parametric covers are often benchmarked directly against traditional indemnity policies, even though they serve different objectives. There’s an education journey here – for risk managers, captives boards and lenders.
For projects where revenue depends heavily on weather conditions – for example, will the wind blow, will the sun shine – parametric programmes, potentially supported by captives, can provide targeted protection. But they need to be designed carefully, with strong data and stakeholder alignment.
What’s your final message to businesses thinking about captives as they invest in the future of energy?
Marine Charbonnier: Don’t see the captive as a stand‑alone insurance vehicle; see it as a strategic tool within your broader capital structure. With the right preparation – governance, analytics, and structuring – it can give you more control over terms and conditions, greater stability of premiums and retentions, and faster, more efficient claims handling.
Vicky Roberts‑Mills: Recognise that risk capital is now a core lever in the energy transition. Technology and policy are essential, but so is the smarter deployment of capital. Captives, integrated into financing strategies and aligned with market capacity, are set to play a central role in powering the next phase of renewables growth.
