The Power of Mutuals in Sustainable Energy

The buzz around governance is growing louder. In recent months, local authority chief financial officers have issued a series of Section 114 notices, halting all non-essential spending due to a mismatch between income and expenditure. It’s similar to a private company publicly acknowledging its insolvency.

Universities recognised that their in-depth understanding of the risks involved and the effective mitigation measures they had in place were not reflected in the insurance offers they received. This led to the establishment of their mutuals, not only in the UK (such as but also overseas, with examples like in Australia and in Canada.

These universities realised that the key to securing bespoke coverage to support their vital activities, at sustainable rates, was to increase ownership and control over the process. By reducing the involvement of third parties with their profit margins and potentially conflicting objectives, they harnessed the collective strength of their members to achieve better outcomes collectively than what was available individually. The primary layer of risk was pooled and retained within their mutuals, allowing for claims to be handled in a manner that met both the member’s and the membership’s needs, while the remaining insurance was arranged on a group basis.

Today, the renewables sector is facing many of the same challenges that universities encountered in the late 1980s and early 1990s, the period that gave rise to these enduring mutuals (which have now been operating successfully for over 30 years):

  1. Unparalleled Expertise: Practitioners in the renewables industry possess exceptional firsthand knowledge and understanding of the exposures, strengths, weaknesses, and effective mitigation strategies, making them an invaluable knowledge resource.
  2. Proactive Risk Management: Insurance, by its nature, is reactive, often waiting for losses to occur before responding. Proactive risk identification and mitigation strategies can trigger cover exclusions, even when such actions benefit all parties. Yet insurers are often not obligated to make payments for preventative work, despite the overall positive impact of a proactive approach.
  3. Frictional Costs: The costs associated with the traditional insurance placement chain, including broker commissions, fees, insurer profit margins, and insurance taxes, significantly reduce the funds available to handle claims.


Universities found that deploying discretionary mutuals was the optimal way to achieve their desired outcomes. Their track record of over 30 years speaks to the success of this approach, as evidenced by the high member satisfaction, loyalty, and extremely high renewal rates.

Mutuals effectively tap into the knowledge and expertise of their members, with ownership and control resting in the hands of those members. This ensures a clear and focused purpose for the mutual, allowing it to operate in a manner that meets the needs of its members and the membership as a whole. Members typically interact directly with their mutual, and pricing is often set near breakeven, given the absence of third-party shareholders with conflicting profit motives. Moreover, income into the mutual does not attract insurance taxes. Mutually beneficial partnerships with forward-thinking insurers cover the remaining risk, with a mutual alignment of interests providing a counterbalance against claims with longer return periods.

As the renewables sector continues to expand in scale, scope, and complexity, it is poised to adopt a similar approach to the one universities and many other sectors have successfully employed.

If you’re facing insurance challenges for your renewable energy projects, contact our Head of Risk Mitigation and Transfer, David Gudopp. We specialise in tailored solutions to ensure your investments are protected and your costs are optimised.

Contact us today to secure your renewable energy future.

David Gudopp

As the Head of Risk Mitigation and Transfer in our Insurance, Mutuals and Risk Management division, David will bring over 20 years of experience to the table. David’s focus is on providing clients with an independent assessment of their risk transfer arrangements and driving targeted outcomes.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

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