By Tomoko Echizenya / Dow Jones Yomiuri Shimbun Pro Managing Editor
Tokio Marine GX $(TMGX)$, which underwrites insurance for renewable energy businesses, aims to capture 10% of the global market share within five years, TMGX Chairman Fraser McLachlan said during an interview with The Yomiuri Shimbun.
TMGX is a project that originated with GCube, a London-based subsidiary of Tokio Marine HCC, and now operates in 38 countries.
For many years, McLachlan led GCube, which specialized in insurance for renewable energy. He emphasized that achieving the targets of 10% market share and 1 billion dollar in revenue from premiums will depend on how they build their "energy mix," a portfolio combining diverse new technologies.
The growth of the renewable energy insurance market is driven by the accelerating adoption of renewables globally. A report published by the McKinsey Global Institute estimates that capital spending on physical assets for energy and land-use systems in the net-zero transition between 2021 and 2050 would amount to about 275 trillion dollars, requiring an increase in the average annual spending from the current 5.7 trillion dollars to 9.2 trillion dollars.
"Demand for energy globally expands above and beyond what I think anybody anticipated about 10 years ago," McLachlan said, expressing his expectations for market growth. He explained that a "huge amount of investment" is going into such industries as green hydrogen and small modular reactors in the nuclear power sector. "Some of our largest projects are in places like Saudi Arabia, in the UAE (United Arab Emirates), (and)...in Pakistan," he added.
"Essentially, what we're doing is we are looking at risk. We're pricing risk. We would let (our clients) transfer (their) risk from (their) balance sheet to our balance sheet. The more projects that get built in different locations around the world, the better. That brings us risk diversification," McLachlan said.
The renewable energy insurance market is dominated by major Western players like Marsh McLennan and Munich Re. However, competition is intensifying in specific segments with many new entrants. TMGX's strength lies in its integrated group approach, supporting both project development and financing. It plans to support highly specialized firms in specific areas like emissions trading and renewable energy credits.
Regarding partnering with or acquiring other companies to expand underwriting capacity, McLachlan said, "It's absolutely on the table."
McLachlan is a pioneer in the renewable energy insurance industry. Wind and solar power projects incrementally progress through the construction and operation phases. He recognized the need to develop insurance contracts reflecting this distinct development process, different from conventional power plants, and has driven differentiation.
The nonlife insurance industry saw renewable energy insurance emerge as a new trend in the 1990s, centered on wind power projects. However, many companies ultimately suffered losses and withdrew. Reflecting on that time, McLachlan said, "I just felt...there was an opportunity and nobody else was doing it...that's what attracted me, originally, to the industry."
Nevertheless, the risks of renewable energy projects are complex, and measuring them always presents hurdles. Among the advanced cutting-edge technologies, many incur costs disproportionately high compared to their power generation capacity. "The critical point is, (if) the project (is) bankable," McLachlan said. He believes insurance companies must align with banks and investors and share a certain degree of risk.
Currently, headwinds exist, such as the United States retreating from the promotion of renewable energy. However, McLachlan expressed optimism, stating, "I think all the time that interest rates are where they currently are...I really can't see investments slowing up in the space (of renewable energy)."
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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.
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October 15, 2025 04:10 ET (08:10 GMT)
Copyright (c) 2025 The Yomiuri Shimbun
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