Hydrogen is expected to play a growing role in the global transition to cleaner energy, with demand projected to increase fivefold by 2050. Clean hydrogen production could reach 60% by 2035, supported by significant investments and an expanding number of projects worldwide. According to data from the Hydrogen Council and McKinsey, about $680 billion in investment may be needed through 2030 to realize these projects.
Currently, more than 60 governments have adopted hydrogen strategies. The number of planned hydrogen projects has risen sharply from around 200 in 2021 to over 1,500 globally—a growth of approximately 600%. Europe leads with 617 planned projects and a total announced investment of $199 billion.
Despite this momentum, the development of hydrogen infrastructure faces challenges related to political, economic, and regulatory factors. Policymakers are urged to address cost issues so that hydrogen can scale competitively against other energy sources. Safety remains a key concern due to the inherent risks associated with hydrogen.
The insurance industry is expected to play a central role as hydrogen becomes more integrated into various sectors. Allianz Commercial estimates that the insurance market for hydrogen project coverage could exceed US$3 billion in premiums by 2030.
“Insurers have a key role to play in the development of the hydrogen economy, enabling investment and innovation, and providing risk management advice and guidance. Collaboration and knowledge-sharing within this industry are essential for developing best practices and building expertise. By addressing these multi-faceted challenges, the insurance sector can support the growth of the hydrogen economy and help facilitate the transition to net-zero emissions,” says Anthony Vassallo, Global Head of Natural Resources at Allianz Commercial.
While hydrogen has long been used in chemical and refinery sectors—with well-known risks such as fire, explosion, and embrittlement—its expansion into new industries brings additional challenges. Large-scale projects will require enhanced risk management as they involve storage and high-temperature combustion processes that can lead to leaks or explosions. Transport applications like fuel cell vehicles also face risks including embrittlement and leaks; port operators must manage highly flammable fuels.
“Evolving technologies always pose challenges such as raising the risk of serial losses, where a common fault requires the replacement of equipment across a project or multiple projects. For example, a large hydrogen production facility could involve hundreds of electrolyzers, with the same design replicated at multiple plants. Serial defect claims have already been seen with wind turbines, leading to large losses for companies and insurers. Meanwhile, as the hydrogen industry scales up, supply chains may come under increasing pressure, with the risk of capacity constraints, and delays for replacement parts,” adds Harald Dimpflmaier, a Regional Head of Natural Resources at Allianz Commercial.
Safety throughout the value chain is critical due to hydrogen’s combustibility. Incidents such as an explosion at a refueling station in Southern Germany last year highlight these risks. Proper equipment design, maintenance procedures, use of compatible materials for embrittlement resistance, robust leak detection systems, facility design for hazard mitigation, and regular training are among recommended safety measures.
“Given the wide reach of the hydrogen value chain and its potential uses, the implications for insurance could be far-reaching, touching on multiple sectors and lines of business over the next decade. However, from an exposure and potential claims perspective, product lines such as Energy, Natural Resources and Liability are likely to see the biggest impact from hydrogen risks over the next five to 10 years, followed by Property and Marine,” explains Vassallo.
Allianz Commercial serves mid-sized businesses as well as large enterprises globally—including consumer brands and financial institutions—and covers unique risks such as offshore wind parks or infrastructure projects. In 2023 alone it generated around €18 billion in gross premium worldwide through its integrated business model spanning over 200 countries via its own teams or partners under Allianz Group.