Joint Action Agencies Secure Better Insurance Coverage and Pricing Available Exclusively to Members of American Public Power Association

October 2017

As one of the largest privately held insurance firms in the U.S., Wortham Power Gen Insurance and its team of more than 500 insurance professionals have placed more than $1.4 billion in premiums through 300+ insurance companies worldwide. Public power joint action agencies are working with Wortham’s industry experts to secure insurance coverage and pricing suited to their specific needs.

Wortham Power Gen Insurance is a marketing partner of Hometown Connections, the utility services subsidiary of the American Public Power Association. Through this partnership, APPA members may choose from a broad portfolio of insurance services designed exclusively for public power. The Cyber Liability & Privacy Insurance program provides data breach protection. The Assurance for Regulated Utilities (ARGUS) property insurance program serves public power utilities that own and insure greater than 20MW of generation assets. Distribution-only utilities may purchase a Property & Casualty package with a variety of options. The Property Damage Recovery program recovers funds from drivers’ insurance policies when automobiles collide with utility poles, traffic lights, and other fixed assets. The Voluntary Employee Benefits program offers employees the option to purchase extra coverage for dental, vision, critical illness, and more. In all, APPA members are securing group purchasing premiums that are averaging 20 to 40% lower in the first year than those available to utilities purchasing individually.

Property and Casualty Insurance Broker for WPPI Energy
The timing was right. Wortham Power Gen Insurance reached out to WPPI Energy about its insurance needs soon after the organization’s ownership in two transmission projects impacted its liability insurance requirements. The Wortham Power Gen team applied its expertise in the public power industry to help WPPI Energy obtain expanded insurance coverage with cost savings.

WPPI Energy is a regional power company serving 51 locally owned, not-for-profit electric utilities. Through WPPI Energy, these public power utilities share resources and own generation facilities to provide reliable, affordable electricity to more than 200,000 homes and businesses in Wisconsin, Michigan’s Upper Peninsula, and Iowa.

In recent years, WPPI Energy has participated in two high-voltage transmission line projects: the CapX2020 – La Crosse Project and the Badger Coulee Project. Because this ownership is direct, WPPI Energy is now a transmission owner within MISO (Midcontinent Independent System Operator, Inc.). MISO operates the transmission system and a centrally dispatched market in portions of 15 states in the Midwest and the South and the Canadian province of Manitoba. Through its direct ownership with several utilities of transmission assets, WPPI Energy faced new liability insurance needs.

“Ryan Weber, our Account Executive, did a great job quarterbacking the different Wortham professionals interacting with us,” said Joe Daggett, Director of Risk Management, WPPI Energy. “It was a total team effort that was thorough and well organized.”

Wortham helped WPPI Energy evaluate its existing insurance portfolio and navigate the selection of carriers and coverages. “Because they understand our business arrangements and the overall utility space, Wortham could provide us with a variety of pricing, terms and coverage options that produced a very successful result for WPPI Energy’s overall insurance program,” Daggett noted.

For example, in early 2017, WPPI Energy needed to remove and reinstall two turbines at one of its generating plants. The project required transport to and from the manufacturer for repairs.  This is something usually outside the scope of typical insurance coverage for a utility. Through Wortham, WPPI Energy secured cost-effective additional insurance coverage in a short period of time to protect the turbines in transit and while being worked on at the manufacturer.

“We are pleased with our partnership with Wortham Power Gen and their ability to give us access to experts who understand the technical aspects of insurance and the specific requirements of public power,” Daggett said. “We find Wortham to be a highly responsive, valuable resource.”

Cyber Liability Insurance for IMEA
A not-for-profit unit of local government comprised of 32 municipal electric systems and one electric cooperative from across Illinois, the Illinois Municipal Electric Agency pursued the purchase of cyber liability insurance to meet certain contractual requirements.

For more than 15 years, IMEA paid monthly fees to its local telecommunications carrier to maintain a twisted-pair analog telemetry connection to a remote substation of Ameren, an investor-owned utility in Illinois. In 2017, IMEA decided to upgrade to a less expensive and much faster Ethernet digital connection to Ameren. Attorneys for Ameren require all companies with digital connections to its systems either to indemnify Ameren if there’s a cybersecurity breach through their equipment or to carry at least $1 million in cyber liability insurance.

“IMEA elected to carry the cyber liability insurance because it made the most financial sense for us versus taking the risk if there was an intrusion on the metering system.   In addition, Moody’s and other investment rating services have now begun factoring in cyber liability exposure when issuing bond ratings,” said Kevin Gaden, President and CEO.

Typically, cyber liability insurance pricing depends on the utility’s annual revenues and its number of “personally identifiable information (PII)” points. These are the potential parts of personal information that hackers try to access through the utility’s SCADA, metering, and other generation, transmission and distribution systems as well as vendors’ systems connected to the utility networks and the number of customer and employee accounts with financial and social security data of interest to bad actors. Kevin Gaden and the IMEA IT group teamed with George Adkins of Wortham Power Gen Insurance to help insurance providers understand that their standard cyber liability pricing parameters do not apply the same to joint action agencies like IMEA to the same extent they apply to individual retail distribution utilities that have all of the end-use customers’ data.

“While IMEA has annual revenues of about $350 million, IMEA has only 31 employees who might download predatory software or click on dangerous links and for whom our agency has direct deposit and SSN data on file,” Gaden said. “Our customers are mostly cities that pay by standard check. Factoring in our metering and communications systems, we maintain maybe 100 PII points as compared to a large utility that may have 50,000 or more. George Adkins of Wortham understood my explanation of the differences between joint action agencies and individual utilities and then helped us secure cyber liability insurance at substantial savings.”

Gaden noted, “George Adkins did a good job. He listened to me about the nature of joint action agencies and helped us secure cyber liability insurance bids that reflect the structure of our organization.”

The Public Power Cyber Liability & Privacy Insurance Program by Hometown Connections and Wortham Power Gen Insurance covers:

  • Liability from a data breach in which customers’ or employees’/retirees personal information [e.g., social security, medical information, banking or credit card numbers] are exposed or stolen;
  • Expenses associated with a data breach including notification costs, credit monitoring, and legal costs;
  • Costs associated with Regulatory Fines & Penalties (HIPPA, NERC, FERC, Payment Cards, etc.);
  • Liability arising from erroneous website media content, as well as costs associated with data recovery, computer fraud, funds transfer loss, and cyber extortion; and
  • Emergency access to professional services to handle data breach crisis management and limit reputational harm.

A single-page form makes the utility’s application process quick and easy.

For More Information

Joe Daggett, CPA, CMA, AINS
Director of Risk Management
WPPI Energy
608-834-4500
jdaggett@wppienergy.org

Kevin M. Gaden
President and CEO
Illinois Municipal Electric Agency
217-789-4632
kgaden@imea.org

George Z. Adkins
Managing Director & Power Generation Practice Leader
Wortham, L.L.C.
281-935-7586
george.adkins@worthaminsurance.com

 

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