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Transcript of William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June...
William Wendland, P.E.
American Nuclear Insurers Glastonbury, Connecticut USA
South Bend, IN
June 2009
“ RETS – REMP Workshop 2009”
AMERICANNUCLEARINSURERS
Nuclear Liability Insurance Impact Nuclear Liability Insurance Impact
Due To Due To
Nuclear Power Plant Effluent ReleasesNuclear Power Plant Effluent Releases
OverviewOverview
Snapshot – The effect that effluent Snapshot – The effect that effluent
releases have on nuclear liability releases have on nuclear liability
insurance at NPPsinsurance at NPPs
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
RiskRisk Term is all inclusive, many componentsTerm is all inclusive, many components
BiologicalBiological
RadiologicalRadiological
FinancialFinancial
Corporate LiabilityCorporate Liability
OthersOthers
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
Nuclear Liability Insurance Nuclear Liability Insurance RiskRisk
$300 Million US Provided to Each US NPP Site$300 Million US Provided to Each US NPP Site
Protection Covers Operators & Suppliers Against Protection Covers Operators & Suppliers Against
Bodily Injury or Property Damage Caused by Nuclear Bodily Injury or Property Damage Caused by Nuclear
HazardHazard
Losses Can Be Losses Can Be CatastrophicCatastrophic or or Non-CatastrophicNon-Catastrophic
Claims Defense Costs Can Be Major Portion of ClaimClaims Defense Costs Can Be Major Portion of Claim
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
Third Party Liability Policies - CoverageThird Party Liability Policies - Coverage
Off-Site Bodily Injury *Off-Site Bodily Injury *
Off-Site Property Damage *Off-Site Property Damage *
On-Site Nuclear-Related Employment On-Site Nuclear-Related Employment
Bodily Injury *Bodily Injury *
* * Caused by the Nuclear Energy HazardCaused by the Nuclear Energy Hazard
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
On-Site Bodily Injury
Off-site Bodily InjuryOff-site Bodily InjuryOff-site Property DamageOff-site Property Damage
TPL Coverage DefinitionsTPL Coverage Definitions
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
Nuclear Liability Nuclear Liability Insurance RiskInsurance Risk
Recent Global Risk Management Recent Global Risk Management Experience – Compliance with Experience – Compliance with Applicable Jurisdictional Regulations Applicable Jurisdictional Regulations does not always offer protection from does not always offer protection from future liabilitiesfuture liabilities
Nuclear Liability Insurance Risk Nuclear Liability Insurance Risk is Increasingis Increasing
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
Nuclear Liability Insurance Nuclear Liability Insurance Risk Risk (Effluent Releases)(Effluent Releases)
Increased Public Awareness of NPP Effluent Increased Public Awareness of NPP Effluent
Releases & Perception of Personal RiskReleases & Perception of Personal Risk
Public does not differentiate between Isotope of Public does not differentiate between Isotope of
Cobalt and Tritium Cobalt and Tritium
1 atom Co-60 ~ 1 atom of Tritium (1 atom Co-60 ~ 1 atom of Tritium (perception))
NPP Releases Cause Harm ! (Perception)NPP Releases Cause Harm ! (Perception)
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
Effluent ReleasesEffluent Releases
Direct Financial Impact (ERF)Direct Financial Impact (ERF)
Indirect Financial Impact (ICRP)Indirect Financial Impact (ICRP)
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
Nuclear Liability Nuclear Liability Insurance RiskInsurance Risk Facilities Can Mitigate Excessive Claims Facilities Can Mitigate Excessive Claims
Defense Costs Through Evidence of Due Defense Costs Through Evidence of Due Care and Proper OperationCare and Proper Operation
ANI's Performance Indicator Areas ANI's Performance Indicator Areas
Can Be Used To Demonstrate Such Can Be Used To Demonstrate Such
Care (ERF)Care (ERF)
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
Average Nuclear Liability Average Nuclear Liability Insurance PremiumInsurance Premium
~ $725,000~ $725,000
(For Single Operating Unit)(For Single Operating Unit)
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
Power Reactor Liability Rating - 6 ComponentsPower Reactor Liability Rating - 6 Components
Reactor TypeReactor Type
Reactor UseReactor Use
Reactor SizeReactor Size
Reactor LocationReactor Location
Type of ContainmentType of Containment
ERF (Introduced 1981)ERF (Introduced 1981)
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
ANI Engineering Rating Factor (ERF)ANI Engineering Rating Factor (ERF)
Implemented 1981Implemented 1981 Collaborative EffortCollaborative Effort Comparative Rating Basis Comparative Rating Basis Reflect Varying Performance of Individual Insureds and Thus Reflect Varying Performance of Individual Insureds and Thus
the Insurance Risk to the Pools Arising out of that the Insurance Risk to the Pools Arising out of that PerformancePerformance
Redistribute Total Nuclear Liability Insurance Premium Redistribute Total Nuclear Liability Insurance Premium Based on Individual Plant Performance (Premium Neutral)Based on Individual Plant Performance (Premium Neutral)
20% Credit20% Credit Best Performers Best Performers
30% Surcharge 30% Surcharge Higher Risk PerformersHigher Risk Performers
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
8 Performance Areas (12 Subfactors)8 Performance Areas (12 Subfactors)
ERFERF
Waterborne Tritium
Airborne Tritium
Airborne Iodine
& Particulate
Noble Gases
Waterborne Mixed Activity
Regulatory Performance
ANI Liability Recommendations
Significant Events
RadWaste Shipments
Safety System Failures
Unplanned Automatic Scrams
Safety System Actuations
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
ERF Computation ProcessERF Computation Process
Develop Approximate Normal DistributionDevelop Approximate Normal Distribution
Sum Weighted ValuesSum Weighted Values
Statistically Scale Weighted ValuesStatistically Scale Weighted Values
Subfactor Weighting *Subfactor Weighting *
ERF Values Range 0.8 to 1.3ERF Values Range 0.8 to 1.3
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
Direct Effect on PremiumDirect Effect on Premium Performance Evaluated on Performance Evaluated on Comparative BasisComparative Basis
Direct Multiplier on PremiumDirect Multiplier on Premium
ANI Recommendation Impact within ERF can be ANI Recommendation Impact within ERF can be ~ $3,000 - $52,000 (Single Unit) ~ $3,000 - $52,000 (Single Unit) ~ 1.5 x for Multi-unit Site~ 1.5 x for Multi-unit Site
Relative Contribution of aggregate environmental Relative Contribution of aggregate environmental component in ERF for plant with best industry component in ERF for plant with best industry performance - performance -
~ $20,000 - $250,000~ $20,000 - $250,000
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
Indirect Effects on PremiumIndirect Effects on Premium
Industry Credit Rating Plan (ICRP)Industry Credit Rating Plan (ICRP)
~ 75% of Premium Set Aside in Reserve Fund~ 75% of Premium Set Aside in Reserve Fund
Held for 10 YearsHeld for 10 Years
Refunds are Effected by Claims Payments Refunds are Effected by Claims Payments (Decreased from 90+%)(Decreased from 90+%)
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
Release Pathway
Site Total (Curies) - Specific Pathway (Airborne/Waterborne)
* A
ppro
xim
ate
Site
D
olla
r S
avin
gs
Effluent Release Strategy Cost Analysis Effluent Release Strategy Cost Analysis
3 year weighted ave (2001, 2002, 2003) Plant quartile rankings at 0% (Best Quartile) Weighted at 8.3% as would be following full phase in 2009
3 year weighted ave (2001, 2002, 2003) Plant quartile rankings at ~4th quartile Weighted at current 2005 value of 3.7%
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
ANI DirectionANI Direction
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
Nuclear Liability Insurance InspectionsNuclear Liability Insurance Inspections
Increased Attention in Select AreasIncreased Attention in Select Areas
Underwriting AdjustmentsUnderwriting Adjustments
Closing RemarksClosing Remarks
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
Groundwater EventsGroundwater Events Piping LeaksPiping Leaks Possible Off-Site ContaminationPossible Off-Site Contamination Drinking WaterDrinking Water HTD’sHTD’s RG 1.21 ObservationsRG 1.21 Observations
o Incorrect DataIncorrect Datao Airborne ParticulateAirborne Particulateo Change ProcessChange Process
New ERF’s due to be out next monthNew ERF’s due to be out next month
"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS
Questions ?Questions ?