A Glastonbury specialty firm generates hundreds of millions of dollars annually insuring half of the world’s 441 nuclear power plants, including the earthquake-ravaged Fukushima Daiichi plant in Japan.
As the world watches technicians at the Japanese nuclear site try to avert further disaster, officials at American Nuclear Insurers in Glastonbury watch events through a different lens.
ANI has spent 54 years insuring against problems large and small at nuclear plants. Company officials say the Japan situation creates multiple short- and long-term ramifications for an already complex industry. But the immediate crisis appears to create no liability for ANI, officials say, because its Fukushima Daiichi reinsurance policy excludes earthquake and flood damage.
“There’s never been an event like this, to be honest with you,” said Ron Sanacore, ANI senior vice president of operations.
ANI is the only U.S. company of its kind. It was created after the Price-Anderson Act of 1957 provided insurance at America’s nuclear sites and has policies with all 104 American nuclear plants. Premiums per site average between $800,000 and $1 million annually.
ANI also provides reinsurance for nuclear sites around the globe. Its reinsurance policy with Japan Atomic Energy Insurance Pool includes property liability coverage for some of the country’s plants and third-party liability coverage for all of Japan’s nuclear plants.
Total insurance costs for the Japan earthquake and tsunami are estimated at $35-$100 billion, but the exposure for ANI appears to be zero.
ANI’s reinsurance policy does not cover property liability at the Fukushima Daiichi plant. The company does cover third-party liability, but the policy has an exclusion for earthquakes and tidal waves.
“Clearly, the event continues to develop, and we are monitoring it closely,” said Michael Cass, ANI vice president and general counsel. “Japanese officials are busy taking care of the event and less concerned about informing the rest of the world what is happening.”
Even if ANI has no exposure on the nuclear disaster, the event is still covered by insurance, likely that offered by the Japanese government, Cass said.
The long-term impact of the Japan disaster on the nuclear insurance industry remains unknown, Sanacore said. The entire insurance industry anticipates a hardening of rates at least in Japan and possibly worldwide, but ANI can’t yet anticipate the impact on its domestic and foreign policies.
“It may potentially have a significant impact on the industry,” Sanacore said. “For the nuclear insurance industry, it is too soon to tell.”
Hartford-based Travelers Cos. has non-nuclear policies in Japan, but doesn’t know the extent of its exposure in Japan. It’s too soon, spokeswoman Jennifer Wislocki said.
For ANI’s policies with American nuclear plants, earthquakes and tidal wave liability isn’t excluded.
As part of the compliance with the Price-Anderson Act, ANI insurance covers any and all problems stemming from the nuclear materials at a power plant. Any liability stemming from non-nuclear problems at a power plant — a car accident, for example — is covered by insurance policies provided by another company. But virtually all policies not written by ANI have an exclusion for nuclear disaster.
“We fill the gap of the nuclear exclusion in other policies,” Cass said.
Under terms of the Price-Anderson Act, each American reactor is insured for $375 million in liability. Beyond that, all power plants pay into a second-tier insurance pool that provides up to $12.6 billion for a single nuclear accident, according to the U.S. Nuclear Regulatory Commission.
Connecticut gets 53 percent of its generation from nuclear power — the Millstone plant owned by Dominion in Waterford. As far as percentage of nuclear power, Connecticut ranks behind only Vermont and New Jersey, according to the Nuclear Energy Institute.
The world’s top producer of nuclear energy is America, generating nearly 800 billion kilowatt hours annually. That is 20 percent of the U.S. total electricity generation. Other countries receive a higher percentage of their power from nuclear — France (77 percent), Belgium (54), Sweden (46) and Japan (28) — but in terms of total generation, America leads the world.
The biggest disaster in American nuclear history — the 1979 Three Mile Island accident in Middletown, Pa. — was covered by the Price Anderson Act. The insurance pools initially had $140 million in coverage to deal with the evacuation and fallout. The total amount paid in claims and litigation costs is $71 million. The last Three Mile Island claim was resolved in 2003.
ANI is a voluntary joint underwriting association that acts on behalf of 21 member companies. None of those 21 companies are from Connecticut and includes the likes of National Union Fire Insurance Co. of Pittsburgh and Munich Reinsurance America Inc.
The Glastonbury firm employs 30, including nine nuclear engineers. The company has been based in Connecticut since the 1970s, when it relocated from New York City. Its Connecticut offices were first in Hartford, then Farmington. The company moved to Glastonbury in 2004.
In addition to insuring all 104 American nuclear plants and reinsuring half of the world’s reactors, ANI provides insurance for all entities that support nuclear production, such as test and research facilities, shippers of nuclear waste, nuclear fuel manufacturers and companies that supply the industry.
“We continue to insure nuclear facilities from around the world,” Sanacore said. “We consider these to be high-quality risks.”
Nuclear insurance has been a strong industry since ANI first started in 1957, Cass said. All claims have been handled efficiently, and major disasters have been few and far between Even with Japan’s Fukushima Daiichi reactors in crisis, throwing nuclear power and its insurance in turmoil, ANI officials expect the industry will remain strong into the future.
“The nuclear industry has been very good to insure over time,” Cass said. “We expect it to be so in the future.”
