INTERVIEW WITH AN UNDERWRITER ALCACERES

Within North America, GCube has made significant progress in developing robust
insurance strategies to support developers, investors and project owners that are
contending with how best to safeguard those turbines that are part of ageing fleets.
We sat down with Head of Underwriting for the US, Al Caceres, to find out more about
this rapidly expanding area of the wind energy insurance market.
1. Within North America alone, tens of thousands of turbines are coming out of
warranty in 2013. What primary challenges does this present to owners, operators
and investors?
Fundamentally, the biggest challenge here is associated with confidence. Owners,
operators, and investors inevitably feel a lot more comfortable when they see a
manufacturer or associated third party stand behind the turbine.
Once that warranty expires, you suddenly enter a grey area because potential risks and
costs can escalate and there are a great deal more unknowns. Are there going to be
replacement parts, for instance? Is the manufacturer going to be in business in the
future for servicing and repairs? For owners, operators, and investors, these risks and
variables can create significant headaches. Whereas at one time warranty products
were viewed as the ultimate safeguard, these industry comforts are coming to an end.
From an insurance perspective, there is a fine balancing act that needs to take place
ensuring that we are comfortable writing the risk, while at the same time keeping the
terms and conditions and policy wording as it should be.
2. Are you seeing situations where people are challenged when trying to find
replacement parts?

We are starting to see situations where third party manufacturers are being forced to
supply replacement parts. This has a subsequent impact on the supply and quality of
parts available and will affect future warranty and insurance options.
3. In light of this, how are you working with the wind industry to help tackle these
challenges?
Were working with the wind industry in three very clear ways.
First, we are helping our brokers and their insureds to identify and prepare for the
expiration of their turbine warranties.
Second, we are helping them to understand and assess whether there are any viable
alternatives and how they really stack up particularly when a manufacturer offers to
extend any existing agreements.
Third, our loss control and technical services team is working with manufacturers to
identify and understand what key components will most likely fail and advising owners
and operators accordingly.
Ultimately, if an existing turbine manufacturer warranty has expired, the comfort and
security that they have previously instilled has changed and this has an inevitable
impact on the future evolution of our policies on offer.
4. To what extent does operations and maintenance help to reduce the costs for
owners and operators managing existing wind farm portfolios?
Operations and maintenance is critical to the future success of the renewable energy
market. Its importance within the wind and solar energy sectors has increased
incrementally over the past few years and it is almost impossible to overstate.
This growing importance has been built on an increased need to properly maintain and
service equipment and to ensure that it meets the necessary industry standards.

However, it is also important for owners and operators to stay on top of equipment
maintenance, to implement regular scheduled shutdowns and to identify and track
issues and faults throughout its lifecycle.
It is worth remembering that while we saw an uptick in construction in the final quarter of
2012, everyone is expecting a much slower market in terms of new turbines coming
online throughout 2013 and conversely, this will have a considerable impact on future
O&M.
Al Caceres, Senior Vice President, Head of Underwriting
As Head of Underwriting for the US, Al manages the team of underwriters for GCube
Insurance Services, Inc. handling all of the risks written for North America. Prior to
joining GCube, Al was a Senior Property Underwriter with AEGIS Insurance Services
responsible for underwriting operational and construction projects for power and utility,
oil/gas, petrochemical companies and renewable energy projects including wind, solar
and ethanol plants. Previously, Mr. Caceres worked at AIG World Source Property as
Assistant Regional Manager and at Starr Technical Risks Agency Inc. as Senior
Property Underwriter. He began his career at Marsh as a Risk Analyst in the Power and
Utilities Division. Mr. Caceres has a Bachelor of Science in Education from Manhattan
College and served in the United States Marine Corps.