Currents Ep327: Market Dynamics in Tax Credit Insurance

Date: December 11, 2025
Host: Todd Alexander (Norton Rose Fulbright)
Guest: Daniel Berger (Head of Tax Insurance, Lockton Companies)

Episode Overview

This episode provides a nuanced analysis of the tax credit insurance market in the wake of recent legislative and regulatory developments, focusing on how market dynamics, claims history, regulatory clarity, and evolving deal structures are shaping insurance offerings for tax credits in the U.S. Dan Berger, a leading broker in the space, shares real-time insights on capacity, pricing, carrier appetites, and the effects of new statutes and guidance on the industry.

Key Discussion Points & Insights

1. The State of the Tax Credit Insurance Market

• Dynamism and Evolution

  • Berger describes the market as "dynamic," noting positive adaptation to ongoing changes in tax credits, especially post-Inflation Reduction Act (IRA) and the “one big beautiful bill.” (01:07)
  • The appetite is shifting, with tightening seen in pricing and carrier capacity, causing some concern among market participants.

• Current Market Capacity

  • There is approximately $1 billion of insurance capacity available for a single transaction, down from $1.5 billion last year. Total market volume is much higher, as this cap applies only per transaction. (02:44)
  • The decrease is mainly attributed to carriers being “more cautious” and lowering their individual exposure limits rather than a widespread market exit. (03:18)

Notable Quote:

“There’s about a billion or so of capacity available in the market. We’re seeing all different types of transactions being insured... It is a healthy market, but certainly one that is evolving very much in real time.”
— Daniel Berger (01:07)

2. Pricing & Claims History

• Pricing Trends

  • For years, insurance pricing hovered between 2-3%. Over the past six months, deals are pricing “around 3% and sometimes north of that.” This is especially acute for smaller deals. (03:56)
  • The main driver is supply-and-demand: high deal volume with limited underwriting bandwidth. (03:56)

• Claims Impact

  • Actual claims have been limited, making this a "highly profitable line of insurance for the carriers." (05:18)
  • Basis step-up claims, though rare, have dampened insurers’ appetite in that area—especially for step-ups above 25%. (06:47)
  • No major IRS campaigns, but step-ups are seen as "low-hanging fruit" for IRS audit activity.

Notable Quote:

“We’ve been able to mitigate some of that impact, especially for larger programs...but it is something that we’re seeing particularly on smaller deals impact the cost of the insurance.”
— Daniel Berger (05:13)

3. Regulatory & Political Impacts

• Administration Changes

  • Effects are “relatively neutral,” as reduced IRS audits (due to staff changes) are balanced against stricter executive directives on enforcement. (06:59)
  • Insurers must account for the long-term nature of policies (7–10 years) that will outlast any single administration. (08:27)

• Clarity and Market Confidence

  • Clarity from new legislation and IRS guidance has created a “runway” for continued market activity at least for the next few years, spurring increased deal activity and confidence among developers. (13:16)

Notable Quote:

“What the new legislation, what the executive orders, what the guidance has provided is clarity on a path going forward...at least certainty to have a runway for the next few years.”
— Daniel Berger (13:16)

4. Evolving Risks: Domestic Content, Construction, and FIAC

• Beginning of Construction

  • Recent IRS guidance settled previous uncertainty, allowing the insurance market to underwrite “begun construction” with confidence, a familiar and insurable risk. (09:11)

• FIAC (Foreign Influence and Anti-Corruption) Risks

  • Coverage is available for projects grandfathered in due to timing, but as newer projects must comply with stricter FIAC requirements, meaningful insurance coverage will depend on future Treasury guidance and robust diligence by all parties. (10:20)

Notable Quote:

“I would say the short of it is tax insurance will adapt...but one of the things that it’s going to be dependent upon is guidance.”
— Daniel Berger (10:44)

5. Policy Variation and Underwriting Nuances

• Variation by Credit Type
  • Insurance is used more frequently for ITC (Investment Tax Credit) than PTC (Production Tax Credit), largely because of ITC’s recapture risk (a five-year forward risk). (14:45)
  • PTC coverage is growing, particularly for newer credits like 45Z, where lack of regulatory guidance increases demand for insurance certainty. (16:30)
  • Underwriting approach, cost, and covered risks differ by credit structure and exposure type.

Notable Quote:

“Tax insurance is probably used more often in the ITC realm than it is for PTCs...not to say that tax insurance is not used for PTCs—it is, and it’s been used probably more often for PTCs over the past 12 months than ever before.”
— Daniel Berger (15:29)

6. Practical Guidance for New Entrants

• How to Get Started
  • Berger encourages early engagement (“Definitely would recommend getting in touch with me.”), noting the process typically takes 2–5 weeks, but can go faster for urgent needs. (18:09)
  • Lockton offers global reach and deep specialization in tax insurance; interested parties can reach Berger directly by email or LinkedIn.

Memorable Moments & Quotes (with Timestamps)

• “The tax credit world has evolved, the tax insurance market has adapted accordingly.” (01:07 – Berger)
• “The decrease [in capacity] is mostly related to carriers reducing their maximum limit that they’re willing to put out.” (03:18 – Berger)
• “Claims that have been paid out have been primarily on basis step-ups...and that has also impacted their appetite.” (05:18 – Berger)
• “It is something that the market is very familiar with and very comfortable insuring.” (09:11 – Berger, on begun construction)
• “Coverage [for FIAC compliance] is really going to be so highly conditional that I’m not sure it’s going to be that valuable. There are going to be so many conditions and exceptions to it.” (11:20 – Berger)
• “It’s been a very exciting time to be in this market and would be happy to answer questions that people may have.” (18:09 – Berger)

Timestamps for Major Segments

• State of the Market & Capacity: 01:07 – 03:10
• Pricing Trends & Claims: 03:47 – 06:47
• Regulatory/Political Factors: 06:47 – 09:03
• Guidance on Construction & FIAC: 09:11 – 12:59
• Market Activity & Deal Trends: 13:16 – 14:45
• Policy Types & Underwriting Differences: 14:45 – 17:44
• Engagement Process & Getting Started: 18:09 – 19:24

Conclusion

This episode is a practical masterclass in the current environment of tax credit insurance, balancing the fast-evolving realities of U.S. energy tax law with candid insights from the deal frontlines. Daniel Berger exudes measured optimism, repeatedly underscoring that while the landscape is evolving—sometimes rapidly—market capacity, clarity, and innovative adaptability remain strong.