william wendland, p.e. american nuclear insurers glastonbury, connecticut usa south bend, in june...

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William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS Nuclear Liability Insurance Nuclear Liability Insurance Impact Impact Due To Due To Nuclear Power Plant Effluent Nuclear Power Plant Effluent Releases Releases

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Page 1: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 2: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 3: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

RiskRisk Term is all inclusive, many componentsTerm is all inclusive, many components

BiologicalBiological

RadiologicalRadiological

FinancialFinancial

Corporate LiabilityCorporate Liability

OthersOthers

"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS

Page 4: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 5: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 6: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 7: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 8: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 9: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

Effluent ReleasesEffluent Releases

Direct Financial Impact (ERF)Direct Financial Impact (ERF)

Indirect Financial Impact (ICRP)Indirect Financial Impact (ICRP)

"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS

Page 10: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 11: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 12: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 13: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 14: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 15: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 16: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 17: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 18: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 19: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 20: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

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

Page 21: William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA South Bend, IN June 2009 “ RETS – REMP Workshop 2009” AMERICAN NUCLEAR INSURERS

"Rets-Remp Workshop 2009"AMERICANNUCLEARINSURERS

Questions ?Questions ?