Nuclear Energy

Decommissionings Open Opportunities for Underwriters

A swell of nuclear decommissioning projects is creating an emerging market for conventional insurance but also new risk-management approaches.
By: | October 3, 2017 • 4 min read
Topics: Energy

Nuclear power plants that were built in large numbers in previous decades are now coming to the end of their licenses in the same large numbers.


Many operators are choosing to decommission the facilities, rather than try to renew the licenses for a variety of economic and political reasons. That big slug of current and near-future projects creates an emerging market for conventional insurance and new risk-management approaches.

Companies with expertise in construction and waste-handling are set to take on these projects, bringing economies of scale and operational efficiencies. Increasingly, they are not just being hired by operators, but are taking ownership of retired facilities and the decommissioning trust funds that by law are funded by every plant operator.

“We’ve been spending a lot of time talking to customers in the construction industry that focus on nuclear,” said Tom Grandmaison, executive vice president and construction casualty leader at AIG.

“They believe what we do: that decommissioning capacity in the U.S. will be necessary in fairly swift order. Call it the next 12 months to five years.

“With that we think there is tremendous opportunity beyond typical insurance like property, casualty and financial lines. There will also be interest in the management and security of decommissioning trust funds in the U.S.”

Tom Grandmaison, executive vice president and construction casualty leader, AIG

Standard lines are required as part of a decommissioning, as they would be for any type of large construction project, but the difference is this is a deconstruction project on the order of $1-$4 billion. A wrap policy that protects the owners and the contractors on the job is necessary. That usually includes general liability, auto liability, workers’ comp, and some builders’ risk and continued non-nuclear property coverage.

Some carriers are hesitant to offer coverage for a nuclear facility even if they are not offering nuclear-liability protection per se. As a result, the markets are somewhat limited.

“It’s a psychological thing, the word nuclear for one,” added Ted Joy, senior vice president, and nuclear practice leader at AIG.

“It’s the fear of going up the chain of command seeking authority to quote projects when historically ‘nuclear’ has been a disqualifying word related to risk. Though if you study the issue, the actual risks have been minimal compared to the perceived risks of nuclear projects and facilities. The safety culture is first class, the work force is better-trained and -educated than similar industrial facilities, and the regulations are intense. So the actual risk does not live up to the perceived or implied risk.”

Upcoming decommissioning projects are aligning into two models of management and financing, according to Joy.

“Regulated utilities, with their continued reliance on a ratepayer base, are largely self-managing decommissioning projects. They hire a contractor to perform the decommissioning work and fund it with the balance of the Nuclear Decommissioning Trust. Funding shortfalls are handled either through delaying the project, which regulations allow up to 60 years, or assessing the utility ratepayers.”

In contrast, deregulated utilities have begun looking at market opportunities to rid themselves of shuttered nuclear plants and their associated liabilities. “Without a ratepayer base as a fallback,” Joy explained, “these utilities have sought buyers that will purchase the plant, its decommissioning liabilities, and its trust fund, and perform the project as a profitable venture.

“This new model presents additional opportunities for the insurance industry beyond standard lines, as financial and risk management become more absolute and the backstops available to regulated utilities are limited.”

There are 102 licensed reactors in the U.S., and a third of those may be shutting in the foreseeable future, states Dan McGarvey, managing director of the power and utility practice at Marsh, and a multiple Risk & Insurance Power Broker® winner.

“This new model presents additional opportunities for the insurance industry beyond standard lines, as financial and risk management become more absolute and the backstops available to regulated utilities are limited.” — Ted Joy, senior vice president, and nuclear practice leader, AIG

“It is a growing trend and an opportunity for third parties to take over the facilities and the trust funds for decommissioning. Utility operators have acknowledged that they are not experts on demolition and waste disposal.”


Most decommissioned plants are put into a status called ‘safestor’ in which they are secured for up to 60 years, but not demolished. The common non-technical expression is ‘mothballed.’ Some reactor stations are completely demolished with waste stored either on site or removed. The decision by the owner among decommissioning choices depends on many factors, and is in many ways an educated guess on possible future costs and regulations.

“This is all about health and physics,” said McGarvey.

“The best move for an operator is to form a partnership with a contractor that has itself a relationship with a waste disposal site. Someone who knows how to section large pressure vessels, and also can deal with fuel and radioactive materials. Some of those contractors are saying they will assume the risk of ownership of the facilities. Now that several such projects have been completed safely and under budget, the industry is getting comfortable with that approach.”

Gregory DL Morris is an independent business journalist based in New York with 25 years’ experience in industry, energy, finance and transportation. He can be reached at [email protected]

More from Risk & Insurance

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Risk Management

The Profession

Janet Sheiner, VP of risk management and real estate at AMN Healthcare Services Inc., sees innovation as an answer to fast-evolving and emerging risks.
By: | March 5, 2018 • 4 min read

R&I: What was your first job?

As a kid, bagging groceries. My first job out of school, part-time temp secretary.

R&I: How did you come to work in risk management?

Risk management picks you; you don’t necessarily pick it. I came into it from a regulatory compliance angle. There’s a natural evolution because a lot of your compliance activities also have the effect of managing your risk.

R&I: What is the risk management community doing right?


There’s much benefit to grounding strategic planning in an ERM framework. That’s a great innovation in the industry, to have more emphasis on ERM. I also think that risk management thought leaders are casting themselves more as enablers of business, not deterrents, a move in the right direction.

R&I: What could the risk management community be doing a better job of?

Justified or not, risk management functions are often viewed as the “Department of No.” We’ve worked hard to cultivate a reputation as the “Department of Maybe,” so partners across the organization see us as business enablers. That reputation has meant entertaining some pretty crazy ideas, but our willingness to try and find a way to “yes” tempered with good risk management has made all the difference.

Janet Sheiner, VP, Risk Management & Real Estate, AMN Healthcare Services Inc.

R&I: What was the best location and year for the RIMS conference and why?

San Diego, of course!  America’s Finest City has the infrastructure, Convention Center, hotels, airport and public transportation — plus you can’t beat our great weather! The restaurant scene is great, not to mention those beautiful coastal views.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

The emergence of risk management as a distinct profession, with four-year degree programs and specific academic curriculum. Now I have people on my team who say their goal is to be a risk manager. I said before that risk management picks you, but we’re getting to a point where people pick it.

R&I: What emerging commercial risk most concerns you?


The commercial insurance market’s ability to innovate to meet customer demand. Businesses need to innovate to stay relevant, and the commercial market needs to innovate with us.  Carriers have to be willing to take on more risk and potentially take a loss to meet the unique and evolving risks companies are facing.

R&I: Of which insurance carrier do you have the highest opinion?

Beazley. They have been an outstanding partner to AMN. They are responsive, flexible and reasonable.  They have evolved with us. They have an appreciation for risk management practices we’ve organically woven into our business, and by extension, this makes them more comfortable with taking on new risks with us.

R&I: Are you optimistic or pessimistic about the U.S. health care industry and why?

I am very optimistic about the health care industry. We have an aging population with burgeoning health care needs, coupled with a decreasing supply of health care providers — that means we have to get smarter about how we manage health care. There’s a lot of opportunity for thought leaders to fill that gap.

R&I: Who is your mentor and why?

Professionally, AMN Healthcare General Counsel, Denise Jackson, has enabled me to do the best work I’ve ever done, and better than I thought I could do.  Personally, my husband Andrew, a second-grade teacher, who has a way of putting things into a human perspective.

R&I: What have you accomplished that you are proudest of?

In my early 20s, I set a goal for the “corner office.” I achieved that when I became vice president.  I received a ‘Values in Practice’ award for trust at AMN. The nomination came from team members I work with every day, and I was incredibly humbled and honored.

R&I: What is your favorite book or movie?

The noir genre, so anything by Raymond Chandler in books. For movies,  “Double Indemnity,” the 1944 Billy Wilder classic, with insurance at the heart of it!

R&I: What is your favorite drink?


Clean water. Check out for how to help people enjoy clean, safe water.

R&I: What’s the best restaurant at which you’ve eaten?

Liqun Roast Duck Restaurant in Beijing.

R&I: What is the most unusual/interesting place you have ever visited?

China. See favorite restaurant above. This restaurant had been open for 100 years in that location. It didn’t exactly have an “A” rating, and it was probably not a place most risk managers would go to.

R&I: What is the riskiest activity you ever engaged in?

Eating that duck at Liqun!

R&I: If the world has a modern hero, who is it and why?

Dr. Seuss who, in response to a 1954 report in Life magazine, worked to reduce illiteracy among school children by making children’s books more interesting. His work continues to educate and entertain children worldwide.

R&I: What do your friends and family think you do?

They’re not really sure!

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]