Corporate Insurance Partner - LED technologies – Insurance solutions

Normal view (turn off text only mode)
You are here:

Rule Engine - Munich Re

LED technologies – Insurance solutions to support performance and long-term growth in the LED industry

The international LED industry is rapidly innovating, and the accelerating adoption of LED technology is having a major impact on the key industry stakeholders. In such market situations, investors and banks attach particular importance to security.

As with market developments in other new technologies, ever shortening innovation cycles are having a major impact on the key industry stakeholders. Low barriers to market entry have led to increased competition and decreasing margins in the LED industry.

Munich Re offers LED manufacturers and investors innovative risk management solutions providing greater planning security and bankability for LED lighting projects.

Five reasons you should consider talking to us:

1. You want protection against excessive warranty claims due to catastrophic LED failure, lumen degradation, and colour shift.

In LED lighting, there are several processes and components involved along the value chain of construction. The downside is the technology risk arising from the interplay and use of the various components, such as packaging material and phosphor deterioration, heat sink and driver failure, or semiconductor wear-out.
With our Module and Full Luminaire Cover we address all these issues and back up LED manufacturers’ long-term warranties against catastrophic LED failure, lumen degradation and colour shift.

  • Lumen degradation: Our solution will create a partnership between Corporate Insurance Partner and LED manufacturers to share the burden of lumen maintenance warranty claims. The insurance is triggered if lumen output drops below pre-agreed values (i.e. below 75% as depicted), and your solvency is protected in the event of catastrophic serial losses.
  • Colour shift: In addition to lumen degradation, we back up colour consistency warranties. Lighting solutions for the retail industries particularly appreciate the features of this cover. Failure to maintain consistent colour negatively affects revenues, most prominently in the food and fashion industries. This is because lighting can positively support or negatively affect the customer’s perception of product quality.


Don’t let catastrophic LED failures and high warranty claims surprise you: Talk to us.

2. Your LED technology is cutting-edge but your warranty experience is limited.

In such an environment, LED manufacturers need to find the right balance between offering their customers reasonable warranties and maintaining sufficient reserves for investment in R&D and marketing.

Balance sheet provisions for warranties covering performance claims slow down innovation cycles. By transferring warranty risks, manufacturers increase their degree of entrepreneurial freedom through more flexible allocation of capital.

Protect your balance sheet and rely on our warranty risk transfer experience: Talk to us.

3. You want to stand out from the competition in the LED industry and create more customer trust with extended warranties.

Warranty insurance adds technological and financial credibility, a decisive variable when it comes to customer trust, and potentially leading to increased market share and revenue. Similarly, added financial security helps to attract investors and favourable financing terms from creditors.

Offer extended warranties to position yourself as a financially sustainable partner: Talk to us.

4. You need to protect your investment and improve project reliability.

We offer tailor-made solutions that help energy service companies (ESCOs) and financiers to attract new investment projects and secure existing investments. These risk-transfer solutions take the technology-related performance risk (particularly in the long term) out of the equation and guarantee the expected energy savings over the lifetime of the project.

  • Energy Savings Cover: The cover consists of a formal insurance contract between Munich Re and the owner of the LED project. The insured party can be a public or private provider of energy services. In exchange for a premium, we agree to pay any shortfall in energy savings below a pre-agreed baseline due to technology failure.


Specifically, the Energy Savings Cover is designed to guarantee project owners the energy savings that are planned and expected to materialise from an LED lighting investment. In principle, these savings pay back investors for their upfront investment. Furthermore, in the unfortunate event of a manufacturer’s insolvency, it indemnifies warranty claims against the manufacturer.

Our value proposition for project owners, ESCOs, banks and investors at a glance:

  • Reduced failure risk, more efficient financing
  • Investment security and protection
  • Stability and technological reliability of the LED project
  • Quality assurance


Peace of mind for both LED investors and end-customers: Talk to us.

5. You want to increase planning security with “DEKRA LED Performance Mark” certification.

The risk assessment procedure, or due diligence, that leads to our Module and Full Luminaire Cover as well as the Energy Savings Cover usually entails a comprehensive study of all the processes and products of potential new insurance customers.

The cooperation between Munich Re and DEKRA is of particular interest for customers in the LED industry. Thanks to substantial alignment between the due diligence process for Munich Re’s LED risk-transfer solutions and the data requirements of the “DEKRA LED Performance Mark”, the test results and certification can form a basis for the underwriting process of Munich Re’s Performance Warranty Cover.

Consequently, manufacturers having the DEKRA LED Performance Mark undergo a streamlined due diligence process for LED performance guarantee solutions and are thus able to save themselves considerable time and effort.

Moreover, the complementary nature of DEKRA Certification’s technical product and process evaluation expertise and Munich Re’s risk-transfer capacity adds significant value for manufacturers and investors who want to insure against financial risks in this relatively new and rapidly consolidating industry.

Both DEKRA Certification and Munich Re retain full control over their own areas of expertise, and there is no financial arrangement between the two parties. The sole aim of this new partnership is to collaborate and use synergies in the best interests of the LED industry as a whole.

Download our flyer for more information on our cooperation with DEKRA (PDF, 271 KB).

Convince investors and customers with DEKRA LED Performance Mark certification: Talk to us.

Overview

Coverages:
  • Module and Full Luminaire Cover
  • Energy Savings Cover
  • Warranty insurance
Industries covered: Renewables, Energy

Please contact us to discuss your specific situation. We look forward to speaking to you about a solution tailored to your risk situation.

Publications

LEDs with a bright future – performance testing and warranty risk transfer

Contact


Main Navigation
Service Men
Accessibility

Note


This publication is available exclusively to Munich Re clients. Please contact your Client Manager.