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23 hours ago
Gregory J Massey wrote a new spotlight post
By Gregory J. Massey, MBA, MS, CIC, CRM, CPCU, ARM, CLCS, PMP
At the 2013 CPCU Society Annual Meeting in New Orleans, the seminar “Powering a Cleaner World in the 21st Century” was presented to a full audience. I moderated the session, which included speakers Dallas Kinley, operations vice president at Mutual Boiler Re, and Stephen C. Clarke, CPCU, assistant vice president—commercial property at ISO, Inc.
The session focused on alternative energy. Alternative to what? Alternative to petroleum-based energy, such as ethanol, bio diesel, methane, hydrogen, nuclear, and compressed natural gas, and alternative to foreign oil, such as coal, tar sands, hydraulic fracturing, off-shore drilling, shale oil, and natural gas. The focus was on renewable energy, such as solar, wind, tidal, hydro, and geothermal.
While the speakers pointed out that there are a lot of advantages to moving to alternative energy, there is also a whole new set of exposures to deal with. When we think of exposures with a traditional source of energy, say, petroleum, the BP oil spill, for example, comes to mind. With alternative energy, what types of exposures are we faced with? Below are benefits and exposures with varying types of alternative energy.
•Cost effective (Tax incentives, Net metering)
•Power quality: Fluctuations can cause damage to equipment
•Safety concerns for repair crews
•Utility may require insurance
•Wind exposure and roof penetrations
•Wiring/electrical safety: concern for first responders
•Increased cost in roof repair
•Zoning issues and “not in my backyard” issues
•Bird strikes (damage to turbines)
•Fire and mechanical breakdown
•Catastrophic brake failure (self destruction)
•Transportation (to get to place of installation)
•Site repair (difficult topography)
•Noise pollution (The sound from standing next to a wind turbine is equivalent to the sound of a lawn mower; from 400 meters away, the sound is equivalent to the sound of a refrigerator.)
Hydro Electric Power
As an underwriter, while one may see positive attributes about insureds wanting to go green, such exposures need to be evaluated appropriately by measuring the overall cost of risk. And, with lack of a sufficient amount of claims data for some of these emerging exposures, it becomes even more difficult to quantify risk and predict loss cost. Underwriters’ reliance upon qualified risk engineers and their insight becomes imperative in the overall risk assessment process.
Gregory J. Massey, MBA, MS, CIC, CRM, CPCU, ARM, CLCS, PMP, is senior vice president and head of technical underwriting for Zurich North America. He is based in New York, N.Y. Massey is involved in the industry: CISR Board of Governors with The National Alliance, National Committee member for the CPCU Society, editor of the Underwriting Interest Group newsletter for the CPCU Society, past panel member for ISO GL and Emerging Issues, past president of three CPCU chapters, CPCU textbook reviewer, and academic advisory council.
Thank you to the CPCU Society Underwriting Interest Group for sharing this article from their recent newsletter. You can find out more information about the Underwriting Interest Group here: http://www.cpcusociety.org/interest-groups/underwritingsee less