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Syracuse June 2004 RETS REMP WORKSHOP 2004 Nuclear Liability Insurance Performance Indicators Nuclear Liability Insurance Performance Indicators for for Nuclear Power Plant Effluent Releases Nuclear Power Plant Effluent Releases

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Nuclear Liability Insurance Performance Indicators Nuclear Liability Insurance Performance Indicators for for Nuclear Power Plant Effluent Releases Nuclear Power Plant Effluent Releases

William Wendland, P.E. American Nuclear Insurers Glastonbury, Connecticut USA

AMERICAN NUCLEAR INSURERS Syracuse June 2004

“ RETS – REMP WORKSHOP 2004”

Overview Overview

  • Background on Nuclear Liability Insurance Risk

Background on Nuclear Liability Insurance Risk

  • Introduce ANI Performance Indicator Areas

Introduce ANI Performance Indicator Areas

  • Performance Trends

Performance Trends

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

Nuclear Liability Insurance Risk Nuclear Liability Insurance Risk Nuclear Liability Insurance Risk Nuclear Liability Insurance Risk

  • $300 US Million Provided to Each US NPP Site

$300 US Million Provided to Each US NPP Site

  • Protection Covers Operators & Suppliers Against

Protection Covers Operators & Suppliers Against Bodily Injury or Property Damage Caused by Bodily Injury or Property Damage Caused by Nuclear Hazard Nuclear Hazard

  • Losses Can Be

Losses Can Be Catastrophic Catastrophic or

  • r Non

Non-

  • Catastrophic

Catastrophic

  • Claims Defense Costs Can Be Major Portion of

Claims Defense Costs Can Be Major Portion of Claim Claim

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

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Nuclear Liability Insurance Risk Nuclear Liability Insurance Risk Nuclear Liability Insurance Risk Nuclear Liability Insurance Risk

  • Increased Public Awareness of NPP Effluent

Increased Public Awareness of NPP Effluent Releases & Perception of Personal Risk Releases & Perception of Personal Risk

  • Do not differentiate between Isotope of Cobalt

Do not differentiate between Isotope of Cobalt-

  • 60

60 and Tritium and Tritium

  • 1 atom Co

1 atom Co-

  • 60 ~ 1 atom of Tritium (perception)

60 ~ 1 atom of Tritium (perception)

  • NPP Releases Cause Harm !

NPP Releases Cause Harm !

  • Majority of Claims from Offsite BI & PD

Majority of Claims from Offsite BI & PD

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

Nuclear Liability Insurance Risk Nuclear Liability Insurance Risk Nuclear Liability Insurance Risk Nuclear Liability Insurance Risk

  • Can Mitigate Excessive Claims Defense Costs

Can Mitigate Excessive Claims Defense Costs Through Evidence of Due Care and Proper Through Evidence of Due Care and Proper Operation Operation

  • ANI's Performance Indicator Areas Can Be

ANI's Performance Indicator Areas Can Be Used To Demonstrate Such Care Used To Demonstrate Such Care

  • ANI Engineering Rating Factor Program

ANI Engineering Rating Factor Program

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

Power Reactor Liability Rating Power Reactor Liability Rating -

  • 5 Components

5 Components

  • Reactor Type

Reactor Type

  • Reactor Use

Reactor Use

  • Reactor Size

Reactor Size

  • Reactor Location

Reactor Location

  • Type of Containment

Type of Containment

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

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Nuclear Liability Insurance Premium Nuclear Liability Insurance Premium Nuclear Liability Insurance Premium Nuclear Liability Insurance Premium

  • Ave Nuclear Liability Premium

Ave Nuclear Liability Premium ~ $725,000 (Single Operating Unit) ~ $725,000 (Single Operating Unit)

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

ANI Engineering Rating Factor (ERF) ANI Engineering Rating Factor (ERF)

  • Implemented 1981

Implemented 1981

  • Collaborative Effort

Collaborative 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 ANI Arising out of that Performance the Insurance Risk to ANI Arising out of that Performance

  • 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% Credit 20% Credit Best Performers Best Performers 30% Surcharge 30% Surcharge Higher Risk Performers Higher Risk Performers

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

Power Reactor Liability Rating Power Reactor Liability Rating -

  • 6 Components

6 Components Reactor Type Reactor Type Reactor Use Reactor Use Reactor Size Reactor Size Reactor Location Reactor Location Type of Containment Type of Containment ERF (Introduced 1981) ERF (Introduced 1981)

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

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12 Performance Areas (Subfactors) 12 Performance Areas (Subfactors)

ERF ERF

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 2004”

AMERICAN NUCLEAR INSURERS

ERF Computation Process ERF Computation Process

Compute Subfactor Value (0 - 10) Compute Subfactor Value (0 - 10) Most Recent Publicly Available Data Most Recent Publicly Available Data Moving 3 Year Weighted Average Moving 3 Year Weighted Average

Year 1 - 50% Year 1 - 50% Year 2 - 33% Year 2 - 33% Year 3 - 17% Year 3 - 17%

Computed Annually (Late Fall) Computed Annually (Late Fall)

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

ERF Computation Process ERF Computation Process

Develop Approximate Normal Distribution Develop Approximate Normal Distribution Sum Weighted Values Sum Weighted Values Statistically Scale Weighted Values Statistically Scale Weighted Values Subfactor Weighting Subfactor Weighting ERF Values Range 0.8 to 1.3 ERF Values Range 0.8 to 1.3

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

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Typical ERF Distribution Typical ERF Distribution

ERF ERF Distribution 0.8 1.0 1.3 Total Liability Premium Traditional Rating Component Performance Rating Component Type x Use x Size x Location x Containment “RETS / REMP 2004” AMERICAN NUCLEAR INSURERS Noble Gases 10% Airborne Iodine & Particulate 10% Airborne Tritium 10% Waterborne Mixed Activity 10% Waterborne Tritium 10% Regulatory Performance 2% ANI Liability Recommendations 5% Significant Events 8% Radwaste Shipments 9% Safety System Failures 11% Unplanned Automatic Scrams 12% Safety System Actuations 3%

Subfactor Percent Contribution Subfactor Percent Contribution

The incremental change in nuclear liability premium resulting from each subfactor

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

Performance Comparison Performance Comparison

Inherent Differences Between Plant Inherent Differences Between Plant Designs and Types Factored In Designs and Types Factored In Independent of ERF Effect on Liability Independent of ERF Effect on Liability Premium Premium 11 Comparative Categories 11 Comparative Categories Performance Profiles Developed Performance Profiles Developed 12 Performance Areas 12 Performance Areas

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

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Performance Comparative Categories Performance Comparative Categories

BWR's PWR's Class MWth

  • No. Units

Class MWth

  • No. Units

BWR's All 34 PWR's All 69 BWR-B 1500-2500 7 PWR-B 1500-2500 10 BWR-C 2500-3000 9 PWR-C 2500-3000 23 BWR-D >3000 18 PWR-D >3000 35 All Plants 103

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

Noble Gases Noble Gases

260 109 150 98 65 (3-Year Weighted Average) Noble Gas (Curies Released) (00,01,02) (95,96,97) (96,97,98) (97,98,99) (98,99,00) 2004 1998 1999 2000 2001 Insurance Syndicate Year - Data Years in () Performance Percentile ( % of plants with lower releases) 78 84 78 60 69 79 86 79 62 71 76 85 80 59 63 25 50 75 100 1 2 3 4 Industry Plant Type Plant Type & Size Quartiles 04 98 00 99 01 04 98 00 99 01 04 98 00 99 01

5 Year Performance Trend 5 Year Performance Trend

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

1st Quartile 2nd Quartile 3rd Quartile 4th Quartile 5 45 3904 153 Curies (3 Yr Wgtd Ave) BWR-B BWR-C BWR-D PWR-B PWR-D PWR-C

Noble Gases Noble Gases (2004)

(2004)

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

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Airborne Iodine & Particulate Airborne Iodine & Particulate (2004)

(2004)

1st Quartile 2nd Quartile 3rd Quartile 4th Quartile 0.000076 0.000568 0.004285 Curies (3 Yr Wgtd Ave) PWR-B PWR-D PWR-C BWR-B BWR-C BWR-D 0.095364 “RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

Airborne Tritium Airborne Tritium (2004)

(2004)

1st Quartile 2nd Quartile 3rd Quartile 4th Quartile 16 37 978 67 Curies (3 Yr Wgtd Ave) BWR-B BWR-C BWR-D PWR-B PWR-D PWR-C “RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

Waterborne Mixed Activity Waterborne Mixed Activity (2004)

(2004)

1st Quartile 2nd Quartile 3rd Quartile 4th Quartile 0.01456 0.0542 1.891 0.1234 Curies (3 Yr Wgtd Ave) BWR-B BWR-C BWR-D PWR-B PWR-D PWR-C “RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

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Waterborne Tritium Waterborne Tritium (2004)

(2004)

Curies (3 Yr Wgtd Ave) 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile 18.9 317 1263 599 BWR-B BWR-C BWR-D PWR-B PWR-D PWR-C “RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

Aggregate Releases Aggregate Releases (2004)

(2004)

1st Quartile 2nd Quartile 3rd Quartile 4th Quartile 262 473 3979 802 Curies (3 Yr Wgtd Ave) BWR-B BWR-C BWR-D PWR-B PWR-D PWR-C PWR BWR “RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

SF Weighting Changes SF Weighting Changes

'02 Separated Out Effluent Release Points '02 Separated Out Effluent Release Points Increased insurance exposure due to Increased insurance exposure due to efluent releases efluent releases Each Effluent Component Contributed ~3.06% Each Effluent Component Contributed ~3.06% to the total 12 Subfactor Compliment to the total 12 Subfactor Compliment For '02 & '03 No Change in Weighting For '02 & '03 No Change in Weighting

Public Drinking Water / Other Off-Site Areas Public Drinking Water / Other Off-Site Areas For '04 Increased Weighting by 22.5% For '04 Increased Weighting by 22.5% Will Increase Weighting by ~22.5% / yr Until All 12 Will Increase Weighting by ~22.5% / yr Until All 12 Subfactors Weighted Equally (~8.3% each) Subfactors Weighted Equally (~8.3% each)

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

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Proposed Weighting Proposed Weighting – – Effluent Releases Effluent Releases

0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 2003 2004 2005 2006 2007 2008 2009 S F W e ig h tin g

Increase Weighting by ~22.5%/yr

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

ERF Value Comparison ERF Value Comparison (2004)

(2004)

BWR's BWR's PWR's PWR's

Class MWth

  • No. Units

Ave ERF Class MWth

  • No. Units

Ave ERF

BWR's All 34 1.08 PWR's All 69 0.96 BWR-B 1500-2500 7 1.02 PWR-B 1500-2500 10 0.94 BWR-C 2500-3000 9 1.06 PWR-C 2500-3000 23 0.95 BWR-D >3000 18 1.1 PWR-D >3000 36 0.98 All Plants 103 1.00

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS

Concluding Remarks Concluding Remarks

  • ANI ERF Reflects Composite Effect of Individual

ANI ERF Reflects Composite Effect of Individual Plant Performance Plant Performance

  • Assists Underwriting Judgment of Nuclear

Assists Underwriting Judgment of Nuclear Liability Insurance Risk Liability Insurance Risk

  • Redistribute Premium Based on Plant

Redistribute Premium Based on Plant Performance Performance

  • Performance Trends Identify Potential

Performance Trends Identify Potential Liability Risk Liability Risk

  • Provides Communication Platform

Provides Communication Platform

“RETS / REMP 2004”

AMERICAN NUCLEAR INSURERS