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Solving the Puzzle: Renewable Energy’s Complex Business Interruption Claims

Having a seasoned adjuster who knows it all - from the equipment to industry regulations - plays a critical part in solving that puzzle.
By: | December 6, 2017 • 6 min read

Keeping renewable energy flowing can be like solving a puzzle when the pieces are always shifting. A myriad of regulations, contractual production obligations, weather fluctuations, and highly specialized equipment all make the renewable energy sector very complex.

The picture gets more complicated when a wind farm suffers a physical loss and subsequent business interruption. Fixing the property damage is one thing, but calculating and recouping business interruption losses is another.

“Calculating the business interruption impact after a loss requires deep industry knowledge and expertise in the renewable energy sector,”said Joe Slane. Slane is the Executive Vice President – Specialty Loss Group and Senior Executive General Adjuster with Engle Martin & Associates, a national independent loss adjusting and claims management firm.

Calculating Lost Income

A wind turbine loss demonstrates the many factors that impact the calculation of lost revenue after equipment failure.

Every day that a wind turbine generator remains out of service translates into decreased production and potential losses in revenue. Calculating the revenue impact is a multi-factor equation that can get complicated fast, making the need for a knowledgeable adjuster all the more imperative.

“Wind speeds and direction can change fast and can be seasonal. Operators are constantly monitoring wind speed and direction so they can facilitate adjustments to maximize power output. You have to consider many dynamics when projecting the production loss,” Slane said.

“An adjuster has to understand power generation to project megawatt hours lost over a certain period of time, during a certain part of the year.”

Joe Slane, Executive Vice President – Specialty Loss Group and Senior Executive General Adjuster

Wind farms generally keep detailed historical data on wind speed seasonality and average power output, so an experienced adjuster could project how much energy would have been produced had the damaged turbine been functioning normally.

Then it’s a matter of determining how much that power is worth.

“Renewable Energy Credits (RECs) and Production Tax Credits (PTCs) may contribute to the farm’s revenue loss, but their value could fluctuate with market demand and the amount of energy that a farm produces,” Slane said.

Properly factoring in these credits requires in-depth knowledge of the renewable energy market’s performance and industry tax regulations.

“Right now, for example, certain areas of the renewable energy market are saturated. Supply is at an all-time high in certain areas, so the value of certain RECs may be low. You have to know what these credits are worth, and how much they would have contributed to the farm’s revenue had there been no loss.”

A skilled adjuster will also understand how a wind farm’s insurance policies work and what exactly is covered.

“How does the policy define business interruption? Is there a time limit on the interruption period? Some policies have a long waiting period deductible. This could mean that if the waiting period is 60 days, any interruption losses incurred before the 60-day mark may be the responsibility of the owner,” Slane said. “A seasoned adjuster in this space should know what to look for within the policy.”

Evaluating the Time Element 

In addition to these factors, understanding the time element claim is critical.

“The time element exposure is dependent on the time it takes to assess and repair the physical damage that’s causing business interruption in the first place,” Slane said. The longer it takes to repair or replace damaged equipment and the more downtime a turbine incurs, the larger the business interruption loss could be.

In an industry like renewable energy that relies on heavy, specialized equipment, repairing damage could be a long and complex process.

“Assessing the damage alone can take up to a week. Sourcing, procuring, and installing new equipment can take several months.”

Without technical knowledge of a plant’s equipment — and the complexities of replacing it — adjusters can’t begin to assess the full scope of a business interruption claim.

“Keep in mind that blades alone are 116 feet long and longer. The blade assembly can weigh 35 tons. The nacelle alone weighs over 55 tons… and all of this sits atop a 70 ton, 200-foot tower,” Slane said. “Transporting these pieces is no easy feat. The logistics of delivery and installation are also complicated because you need cranes to lift the equipment.”

Site access and weather issues can further delay the process.

“Some wind farms are out in the middle of wide fields with no roads leading to them. Others are in the side of a mountain. It’s difficult moving cranes and cargo trucks in and out of these sites,” Slane said.

Even when all the pieces are in place, high winds, extreme cold, rain, or ice can keep a project grounded. The conditions need to be just right for installation to be done correctly and safely. All the while, the farm continues to lose out on revenue from that turbine. Adjusters need to be able to make that connection to arrive at a fair business interruption assessment.

Adjuster Expertise Is The Key To Solving The Puzzle

Navigating the complexities of a business interruption loss in renewable energy demands an adjuster who knows it all – the equipment, the weather patterns, power generation data, market fluctuations, financial impacts, industry regulations, and insurance.

“Insureds don’t want to waste time talking with an adjuster who doesn’t know their business,” Slane said.

“At Engle Martin, we can speak the lingo. RECs, PTCs, FERC — which is the Federal Energy Regulatory Commission – these acronyms are part of the everyday vocabulary,” Slane said. “If you don’t know or quickly learn the terminology and processes, you could lose credibility.”

Engle Martin’s Energy & Power Group, a subset of the company’s Specialty Loss Group, has the expertise to engage with wind farm operators and evaluate every factor of a business interruption claim. The Specialty Loss Group consists of 40 Executive General Adjusters averaging over 20 years of claims adjusting experience.

Having a true energy expert in the field benefits all parties. Carriers want to know their adjusters are experienced, accurate, and professional so they can properly measure a claim. Insureds want an adjuster who can speak their language and who understands all the components of a loss. Brokers are the go-between; they want the best services for their client, and a fair claim valuation for carriers.

“Keeping communication channels open among those parties is essential in a complex, lengthy loss,” Slane said. “Having a trusted expert at the center of the claim is critical.”

To learn more, visit: http://www.englemartin.com/.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Engle Martin & Associates. The editorial staff of Risk & Insurance had no role in its preparation.




Atlanta-based Engle Martin & Associates is a leading national independent loss adjusting and claims management provider. Privately held and owner operated, the firm delivers a comprehensive line of property and casualty claims service offerings.

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]