Josh Jennings, The Galileo Of Renewable Property Insurance

In this #Solar100 interview, Isaac McLean, Head of Property at kWh Analytics, speaks with Josh Jennings, Head of Inland Marine and Property at Aspen Insurance.

Josh Jennings has always been a visionary in the insurance industry. He started his career at a young age, honing his skills in Inland Marine underwriting at Nationwide and Hartford. Today, as Head of Inland Marine at Aspen Insurance, Josh continues to lead the way by pioneering secure renewable energy property capacity through his partnership with kWh Analytics. With his innovative approach and exceptional leadership, Josh is transforming the landscape of the insurance industry, much like how Galileo revolutionized our understanding of the universe. Galileo’s groundbreaking discoveries included recognizing the sun as the center of our solar system, changing the way people thought about space, just
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as Josh is changing the way carriers approach renewable energy underwriting.

THE PATH TO PROPERTY

Isaac McLean: So, Josh, you have a history in renewables, but also in inland marine and insurance. Can you talk us through your career to date and how you found your way to where you are now, as Head of Inland and Property at Aspen Insurance?

Josh Jennings: Everybody has a unique background of getting into insurance. For me, it began when I was at college. My parents owned a Nationwide insurance agency, and while I was at the University of Akron, I attended class two days a week and worked at the agency as a junior commercial producer for three days a week. My parents are both the primary principal agents, so I had a front-row seat to see the operations of a small business, the highs, and the lows, all of which I loved. It was an incredible experience that provided me with a hands-on introduction to insurance. The personal relationships I built and the feeling that I got from making people feel safer through insurance also pulled me in from day one.

After school, I left the family business and joined The Hartford as an inland marine underwriter in Cleveland. At the time I wasn’t sure about underwriting, as it seemed to be about crunching numbers at a desk all day. However, I quickly found that the role focuses a lot on relationship-building, problem-solving, and partnering with different agents and brokers. I gave it a shot and really enjoyed it, benefitting from some early success as well.

About a year into The Hartford, management moved me to Chicago, and I was very excited to be working in a major city. I was early in my career, eager to establish my brand, my own market following, and reputation. So, I built out a book of business and progressed in my career with promotions to various leadership roles. Shortly thereafter, my first introduction to the renewable energy space occurred when the business began offering builders risk coverage, from the ground up, for utility solar sites. This line of coverage was relatively new in the marketplace and felt like something that was going to be around for a long time. I was interested in this type of coverage from an opportunistic perspective and believed there was a future in it, as the energy industry began shifting to offering more renewable products.

SEEING THE PARALLELS

McLean: With inland marine being the basis of your career, how’s that shaped your perspective on renewables? Are there any key differences or crossovers?

Jennings: There is crossover. With Inland Marine coverage, there is an art to the underwriting process. Not every account is cookie-cutter, and the same can be said about renewables. Technology constantly evolves and new applications are coming to us from different parts of the country. For example, at Aspen, we are seeing applications from more battery energy storage facilities. It’s been a quick evolution, and a natural opportunity for insurance to be nimble, creative and find solutions in that space.

McLean: What are some of the biggest challenges you see in the solar insurance market?

Jennings: The biggest challenges are that the number of renewables being offered in the market are increasing due to the increase in severity and frequency of our weather. By that, I mean not only named storms, but convective storms as well. Cat capacities are tightening, from an industry perspective, so the market needs to be consistent on pricing and risk, and price accordingly for the risk. For the market to be sustainable long term, I think managing aggregation and limit deployment is critical, and the industry needs to be a consistent supporter in this space. We need to avoid the peaks and valleys of performance results of the renewable space to avoid exits and further capacity restrictions.

McLean: Yes, I agree. That’s definitely a challenge we can address together. With hurricanes and some of the recent storm activity, do you see impacts on rates and terms?

Jennings: Yes, there’ll be a trickledown effect from named windstorms and the pricing of that capacity is increasing. I think cat, in general, is very sensitive, so you’re going to see some increases in pricing across the board based on where the markets are going. With severe convective storms, I think there may be some pushback. I see owners and insurers taking on more risk with increased retentions and deductibles. It’s a necessary movement to keep the pricing where it needs to be.

McLean: Yes, I agree. I think it’s tough for some of these smaller industries when they say, Hurricane Ian wasn’t a big loss driver for our industry, and yet we’re seeing impacts to our pricing and terms as a result, but it’s because the broader insurance industry really has been impacted – the shared capital pool that’s backing all those risks and exposures has been impacted. Solar is not insulated from the broader market dynamics.

Jennings: I think we need better communication among the insurers, solar manufacturers, and solar installers. For example, we need to understand how the panels react in different weather patterns, what the proactive controls are, and what they [the solar manufacturers] are doing to deploy and differentiate themselves. Having a clear understanding of how the insured’s particular product is made and how it is installed is going to be important to limit pricing and term changes and stack up against peers in the market.

McLean: Yes, that’s the craft in insurance. Being able to differentiate between those manufacturers and the different hardware configurations that we see.

Jennings: For example, at kWh, you have access to information that nobody else has, so you are not taking a broad brush across an industry; you’re analyzing insurance individually and pricing the risk accordingly.

LESSONS LEARNED FROM WRITING SOLAR

McLean: Aspen writes some broad and utility-scale solar. Any learnings that you can share from the book of business you have today?

Jennings: I would say, from the utility-scale versus the residential applications, we underwrite them similarly, but they’re still different. Residential has billions of dollars of value spread across with great spread of risk. So, where you underwrite is, from a portfolio and an aggregate management perspective, and really preparing an understanding of exposures on potential significant events or Black Swan type events and make sure we’re not overexposed on one area, from individual utility type solar, you’re typically location-based, you know where the project is, you can underwrite, you know the details, you know the panels, you know the construction of it, the Nat Cat exposure. The challenging part for some of the utility-scale solar offerings is where they’re manufactured, which is often in rural areas. I think some of the cat modeling has been very off for the last 10+ years; it’s been a bit too aggressive, based on what it should be. The industry has seen some inaccurate, inconsistent results based on pricing for cat, and in rural areas, for how they perform against hail and tornado, and various other weather-related events. The modeling session is getting better and, subsequently, becoming more conservative. Panel design and manufacturing is being developed to withstand a lot more events than before.

McLean: We have a lot of data, and the industry has fine-tuned our cat models to buildings, but solar performs differently, especially for some of the different perils like you mentioned, such as severe convective storms. We’re calibrating them to our asset classes and learning quite a bit, but unfortunately, the industry has suffered over the last 5 years.

WORDS OF WISDOM

McLean: What advice do you have for professionals looking to get started in insurance?

Jennings: Insurance is not typically promoted in colleges as a career choice, which is disappointing because that is a time in student’s life when they are investigating different career paths. Without insurance, society wouldn’t function and there are many different career opportunities in insurance. We have positions that enable a person to be creative, analytical, meet new people, travel, manage different projects, solve problems, work autonomously or as part of a team – basically something for just about everyone! I had the good fortune to visit some incredible places in the world that I probably wouldn’t have seen if I had chosen a different career path.

Having mentors early in my career helped set me up for success early on. I had some great mentors in the business whom I would lean on and use as a sounding board. You have to put yourself out there and cultivate those relationships. Now I’m at a point where I can give back and mentor others, which is very rewarding. I tell people to never forget who helped you and to send the elevator back down to help the next generation coming up. Lastly, I would advise young professionals to take control of their careers. Nobody’s going to do it for them. Be patient, but not too patient. Things take time, but these individuals also need to be proactive.