The $787.2 billion American Recovery and Reinvestment Act provided $43 billion to the energy sector with the goal of moving the United States forward in pursuing energy independence. Alternative fuel is actually a part of every sector. For example, a primary purpose of improving the electricity grid is to enable transfer of wind, solar and hydro power generated in rural areas to urban areas where it is most needed. While the government money is intended to provide infrastructure and encouragement, private industry will be the real growth engine for alternative fuel industries.

For more information on the American Recovery and Reinvestment Act:
www.recovery.gov

Energy independence is a concept all citizens can agree on. Unfortunately, most of them want it at a very cheap price and without affecting their standard of living. When oil prices are high, the market demands alternative fuels along with energy efficient cars and appliances. When they retreat, the market is less enamored with making such changes. This causes havoc to emerging alternative fuel industries.

Fortunately, some insurance carriers, MGAs and brokers understand the needs of these industries and their potential. Instead of standing on the sidelines, waiting for market changes to stabilize, they are actively participating in helping their customers by providing both coverage and risk management services.

Here's an interesting possible claim scenario.

Whispering Winds, Inc., has three operational wind farms and is building a fourth. It is contractually obligated to provide energy to a number of customers. A skipping tornado damages turbines at two of the three operating farms and causes additional damage at the farm under construction. The damaged turbines require parts that will take at least three months to receive. This means a significant business income loss in addition to a significant penalty due to its inability to meet its contractual obligations to supply power.

Adding insult to injury, residents near the damaged farms demand changes. They want quieter and less invasive turbines and threaten to block access for repairs unless their grievances are addressed.

Does alternative energy have an exact definition?

According to Richard Kern, Manager – Energy Division at James River Insurance Company, the major common alternative energy businesses are wind, solar and biofuels—such as ethanol and biodiesel. He says, “We are seeing the resurrection of alternative energy sources emphasized in the 1980’s such as waste-to-energy. We are seeing an increase in hydro projects and methane capture at landfills and farms. There is also an increase in R&D operations, especially in cellulosic ethanol and next generation batteries.”

David Price, Executive Vice President and Chief Underwriting Officer at Burns & Wilcox agrees and adds, “Most recently, liquid petroleum and gas is gaining in popularity. This is where oil companies have a system to extract oil from coal shale.” Karen Harris, Marketing Director at Quadrant Insurance Managers, adds hydroelectric generation to the list.

The type of energy supplied determines the appetite in the marketplace. As an example, according to Mr. Price, “If it’s something like biofuel, most standard companies with an oil and gas underwriting department will entertain it.” Ms. Harris says that Quadrant Insurance Managers writes both wind and hydro projects through Century Surety for developers, risks in construction, equity owners, and operational risks. According to Mr. Kern, James River Insurance is committed to providing coverage for all phases of alternative energy operations.

Click here for the complete article … 

MANAGING GENERAL AGENTS
INSURANCE COMPANIES