Allianz Commercial: Insurance market for hydrogen could reach more than US$3 billion by 2030
- Hydrogen demand could increase fivefold by 2050, while clean production may rise to 60% by 2035, driven by significant investments and planned projects globally.
While the potential of hydrogen is undoubtable, there are still challenges and headwinds to overcome. The potential size and scope of the hydrogen economy will depend on a range of factors including the evolving political, trade, and economic environment, as well as demand. Policymakers and regulators need to address costs for the development of the infrastructure, so that scaling up at a competitive level towards other energy sources is possible. Across all industries, stringent safety measures will be vital to manage hydrogen's inherent risks. This is where the insurance industry comes into play. As hydrogen becomes integrated into the global economy, insurers can expect to see a significant increase in demand for coverage, with Allianz Commercial expecting the insurance market for hydrogen project coverage to grow to over US$3 billion in premiums by 2030.
"Insurers have a key role to play in the development of the hydrogen economy, enabling investment and innovation, and providing risk management advice and guidance. Collaboration and knowledge-sharing within this industry are essential for developing best practices and building expertise. By addressing these multi-faceted challenges, the insurance sector can support the growth of the hydrogen economy and help facilitate the transition to net-zero emissions," says Anthony Vassallo, Global Head of Natural Resources at Allianz Commercial.
Hydrogen offers great potential in Asia Pacific, but challenges and risks remain
While it holds much promise and has been used in the chemical and refinery sectors for many decades, with risks such as fire, explosion and embrittlement being already well-known, the integration of hydrogen into other industries brings a range of challenges with currently planned mega projects requiring a scale-up of risk management. Energy production facilities will involve hydrogen storage and high-temperature combustion, which can lead to leaks and explosions. In transport, applications like hydrogen fuel cell vehicles will also face risks of hydrogen embrittlement and leaks. Port operators, bunkering facilities and fuel handlers will need to manage highly flammable and cryogenic hydrogen fuels, bringing accident and contamination risks.
"Hydrogen holds significant promise in driving the energy transition across the Asia Pacific region, and we are already seeing power generation projects being developed that are designed to run with hydrogen as a potential fuel source. Further collaboration between countries can also be expected, in areas such as storage and transportation infrastructure, that will help to accelerate the deployment of hydrogen in the region. Allianz Commercial, with its proven expertise in low-carbon and energy sectors, is dedicated to supporting clients on their sustainability journey," adds Trent Cannings, Regional Head of Natural Resources & Construction and Head of Specialty Hub at Allianz Commercial Asia Pacific.
Risk management and mitigation are crucial for hydrogen projects
Given hydrogen's unique properties and high combustibility, ensuring safety throughout the value chain is crucial. Analysis of hydrogen-related incidents shows that undetected leaks can easily lead to explosions; equipment design, maintenance and training can help prevent the escape of flammable hydrogen gas, while the risks of ignition can also be reduced by locating hydrogen facilities in the open. Embrittlement risks can be managed using hydrogen-compatible materials and specifically designed resistant coatings. In addition to preventing incidents, organizations can take steps to limit the extent of property damage, business interruption, and third-party liability. Buildings and facilities should be designed and constructed to withstand natural hazards, fire and explosion, and limit damage to adjacent property and equipment. Robust hydrogen leak detection and isolation systems are also paramount. Human error is also a common factor in large losses. Operational, safety, emergency procedures, and training should be frequently updated, including having robust and well-rehearsed plans in place for accidental releases.
"Given the wide reach of the hydrogen value chain and its potential uses, the implications for insurance could be far-reaching, touching on multiple sectors and lines of business over the next decade. However, from an exposure and potential claims perspective, product lines such as Energy, Natural Resources and Liability are likely to see the biggest impact from hydrogen risks over the next five to 10 years, followed by Property and Marine," explains Vassallo.
Hashtag: #allianzcommercial
https://commercial.allianz.com/https://www.linkedin.com/company/allianz-commercial/
The issuer is solely responsible for the content of this announcement.
About Allianz Commercial
Allianz Commercial is the center of expertise and global line of Allianz Group for insuring mid-sized businesses, large enterprises and specialist risks. Among our customers are the world's largest consumer brands, financial institutions and industry players, the global aviation and shipping industry as well as family-owned and medium enterprises which are the backbone of the economy. We also cover unique risks such as offshore wind parks, infrastructure projects or film productions. Powered by the employees, financial strength, and network of the world's #1 insurance brand, we work together to help our customers prepare for what's ahead: They trust us in providing a wide range of traditional and alternative risk transfer solutions, outstanding risk consulting and Multinational services as well as seamless claims handling. Allianz Commercial brings together the large corporate insurance business of Allianz Global Corporate & Specialty (AGCS) and the commercial insurance business of national Allianz Property & Casualty entities serving mid-sized companies. We are present in over 200 countries and territories either through our own teams or the Allianz Group network and partners. In 2024, the integrated business of Allianz Commercial generated around €18 billion in gross premium globally.
