CEO INTRODUCTION MEMBER FOCUS RISK MANAGEMENT VISION AND MISSION EVOLVING WITH CHANGE
ORGANIZATIONALCAPABILITIES
CORE PRODUCTS AND SERVICES
Renewed Commitment to Excellence and Member Service
2016 NEIL Strategy Brief
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Improving Member Collaboration and ValueThe nuclear energy industry remains committed to its focus on continuous improvement and performance excellence, coupled with an unparalleled pledge to preserving a culture of safety. Plant performance, as measured by several factors, is arguably at an all-time high. However, growth forecasts for electricity demand remain low, and an ongoing surplus of low-cost natural gas is creating unprecedented challenges for the economics of nuclear energy. In addition, the industry is operating in an environment where the
long-term benefits of nuclear energy—such as carbon-free electricity generation, and stable and reliable base load capacity—are not being recognized in competitive wholesale electricity markets. In response, the
industry is taking steps to reduce costs and improve operational efficiencies, while maintaining its commitment to safety and reliability.
In an effort to support these initiatives over the course of the last year, NEIL began working closely with our Members and key partners to identify opportunities to improve service and further our value proposition. The message from our Members was clear: focus on enhancing current products and services to better serve the existing Membership, and seek to identify and implement more efficient and cost-effective risk transfer options.
To be truly responsive, we are reviewing our organizational framework and capabilities to ensure we are fully prepared to meet the future needs of our Members. Insurance coverage needs are evolving and individual company risk appetites are becoming increasingly more disparate, as Members seek to respond to an environment in which the pace of change is unprecedented. In response, we are working to offer greater optionality in NEIL products and services without sacrificing our commitment to Mutuality or the many benefits and strengths that a group captive offers. We believe this is a key aspect to delivering value.
Although NEIL is undergoing substantial change, it is important to reinforce that our core mission remains intact. Our financial strength and our commitment to maintain sufficient resources to cover two full-limit nuclear losses remain the bedrock of our purpose. At the same time, we are taking significant steps to improve our capabilities, building an organizational framework and service model that will support our ability to consistently deliver value to our Members.
I hope many of you are beginning to realize the benefits of our renewed commitment to improving our products and services. However, you should know that this is only the beginning of our efforts to create and expand value. As we continue this work in 2017 and beyond, a critical component in our ability to be successful is the ongoing feedback and enhanced engagement with those we serve—our Members. We look forward to working with all of you in the coming months and years as we remain aligned in our collective desire to ensure that nuclear energy is recognized as a safe, cost-effective, reliable, and clean energy resource.
Bruce A. SassiPresident and CEO
STRATEGIC GOALS
MISSION
VISION
GUIDINGPRINCIPLES
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Focusing on the Membership
In pursuit of our commitment to excellence in insurance and loss prevention, NEIL is taking a fresh look at our core business in several key areas, including Member engagement, communications, risk retention, and products and services. For every area we examined, we asked ourselves a basic question: what actions might we take to better serve and enhance the value proposition for our existing Members? We are also re-examining how today’s changing and challenging environment affects what the NEIL commitment to excellence means. The result has been a conscious decision to reallocate and reinvest NEIL resources away from cultivating new Members and new markets, and toward improving service and value for our current Members. This renewed focus on our value proposition—in the context of Mutuality and our Members’ organizational objectives—offers a firm basis from which to drive continuous improvement in our products and services, both domestic and international.
A CHANGING APPROACHThis willingness to innovate and open ourselves up to new concepts is critical to our collective success going forward. One of our key focus areas is improving engagement with our Members to better understand how current challenges are impacting their organizations. We are continuing to work with the leadership of our three
Advisory Committees to explore and implement improvements to the way we operate. As we work together through Member organizational changes, including Member representative turnover and evolving business models, we are remaining true to our core mission and our commitment to Mutuality, while also working to improve how we conduct business in a changing environment.
The reorganization of the Insurance Advisory Committee (IAC) is one example of how we are working with our Member representatives to improve processes and enhance Member service through collaboration and engagement. We are moving away from our historic Task Force structure and toward sustainable Subcommittees, supported by investments in off-the-shelf technology platforms like Directors Desk. We are seeking other opportunities to improve processes, reduce burdens, and meaningfully improve the level of engagement through the Advisory Committees.
Another important focus area is our investment in Member stewardship—hearing directly from the Member as an Insured. In addition to meeting face-to-face with individual risk management teams, we are building on the successful model of our annual Loss Control Workshops and biennial European Gatherings. We are holding both Risk & Insurance Workshops and Claims Workshops to ensure our Members have the tools and support they need. These expanded individual
and group engagements present meaningful forums to identify challenges and opportunities faced by those directly affected by NEIL products and services. They provide the opportunity for feedback and insights needed to strengthen our alignment and to establish priorities through our Advisory Committees.
COMMITTED TO MUTUALITYAmong the strengths and benefits of the group captive is the focus on insuring the risks of its Members, along with sharing in the captive’s successes. We are exploring changes to our organizational framework, and enhancements to our products and services, that build on our commitment to Mutuality. We are identifying opportunities for additional optionality, specifically with respect to Member risks which are increasingly varied and diverse. Our Guiding Principles ensure that these efforts are prudently considered and transparently monitored.
Through enhanced engagement with our Members, an improved Advisory Committee structure, and an emphasis on Member stewardship, NEIL is expanding our ability to identify and evaluate opportunities efficiently, and ensuring we are well positioned to improve the Member experience. For some, expanded optionality may take the form of facultative reinsurance for capacity in excess of our core product offerings. For others, it may be improving
transactional efficiency or ensuring critical issues are addressed by the Advisory Committees. In these ways, we are working to assist our Members in maximizing the benefits of renewed commitment to Mutuality in pursuit of Excellence.
Improvements in Member service including sustainable Subcommittees, expanded workshops, and other opportunities for face-to-face engagement are fostering collaboration and identifying challenges and opportunities more directly and effectively.
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Evolving with Change
As outlined earlier, the current energy and economic environment is presenting significant challenges to nuclear energy and our Members. The industry is addressing these changes through initiatives aimed at preserving safety and reliability while reducing costs through increased efficiencies in key areas. NEIL is also taking significant steps to support the nuclear energy industry and to identify the most appropriate risk transfer mechanisms available as the risk appetites of our Members become increasingly disparate.
SUPPORTING THE INDUSTRYNEIL is taking a two-pronged approach in supporting the nuclear energy industry and our Members in achieving the goals identified through the Delivering the Nuclear Promise initiative. First, we are directly engaged with a number of the working groups of the initiative to ensure there is no increase in risk of loss that could adversely impact the Mutual based on proposed changes. Where appropriate, we are revising our processes to remain in alignment with our Members, and their goals and objectives.
Second, NEIL is reviewing our own practices and processes to ensure the costs associated with specific requirements are well managed and that our resources are appropriately focused on areas of risk. Through careful analysis, we identified Loss Control Plant Evaluations as a significant opportunity for improvement.
The frequency of plant evaluations has typically been on an annual basis. Our revised approach for plant evaluation scheduling is now more risk-based, driven by the particular risk characteristics associated with Member Insured sites. Locations that have a lower risk profile are evaluated less frequently (e.g., 18 to 24 months), while sites that have a higher risk profile may be evaluated every six to twelve months. This reduces the impact on station resources, as it typically requires three man-weeks of Member support to complete a plant evaluation. The reduced frequency further allows us to devote our resources to areas that may pose a higher consequence to the Mutual.
NEIL is continuing to enhance our Member-risk approach by moving Loss Control away from a compliance-based philosophy, grounded in strict verbatim compliance with the Standards, toward a consequence-based approach. In this model, non-compliance with Standards is reviewed to determine the loss expectancy. For areas that pose little to no risk of loss, recommendations will typically not be written. However, where a measurable risk of loss exists, recommendations would be written and the consequences of non-compliance provided to the Member in terms of Loss Expectancies. Our Members are then able to apply the Loss Expectancy estimates within their organizations to optimize resource
Our evolving consequence-based approach to risk management provides for a disciplined, repeatable process with five distinct risk status communications for Members to apply and align within their organizations.
alignment with Standards compliance, and do so with a clear appreciation for potential consequences of non-compliance.
We are also working with our Members to develop emerging risk processes that identify risks and exposures, and allow for mitigating actions to be taken before a loss occurs. One example is the Project Enterprise Risk Program, where large construction projects at our Member stations are reviewed to identify risks that could result in a loss to the Mutual. Another example is the review of Turbine Building Fire Protection measures for potential oil fires. For the latter, cost-effective measures are being developed that our Members can implement, significantly reducing the loss exposure.
NEIL is continuing to work with our Members in key areas and we are seeing positive results. We are achieving a better understanding of our Members’ business processes, goals, and objectives. Conversely, our Members are building a stronger understanding of NEIL processes and evolving capabilities. Together, these changes are creating a stronger Mutual.
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Strengthening Organizational Capabilities
NEIL is making a number of changes within our organization to improve service and to identify opportunities to further the Company’s value proposition. We are pursuing opportunities to enhance alignment through improved dialogue, engagement, service, and value. The organizational changes underway include an enhanced Service Delivery Model, an improved communications structure, and renewed emphasis on professional development for NEIL employees.
ENHANCED MEMBER ENGAGEMENTDeveloping a Service Delivery Model approach is a major focus for how we are improving the ways we work with our Members. Our vision centers around putting in place a structure where each NEIL Member has a dedicated Core Service Team responsible for Member service. The Core Service Team will serve as the primary point of contact for our Members on all insurance, loss prevention, and claims matters. The team will ensure that NEIL is providing excellence in Member service. An additional, but essential component to success will be continuing the Stewardship meetings that allow our Members to interact with NEIL as an Insured, or, in other words, as the customer. Members are able to provide us with insights into their company’s direction as well as real-time feedback on our service performance. Through these interactions, we are gaining feedback and perspective that informs continuing service
a tremendous response and are working to implement many of those recommendations and suggestions. We are already making improvements to our Member newsletter to better target information to Member needs, raise awareness of important issues, and streamline the quantity of information from NEIL.
We are optimizing the number of touch points, emails, and interactions across Member organizations in order to reduce burdens and
allow Members to seek out additional detail at their discretion. We are seeking to leverage technology for managing materials for Advisory Committee meetings, upgrading our on-line meeting registration service, and responding to Member feedback by updating our website for easier navigation and research capabilities. Our efforts to improve communications to the Membership are being supported by a new communications structure at NEIL that includes a designated Communications Lead backed by individual departmental representatives.
FOCUS ON PROFESSIONAL DEVELOPMENTNEIL is leveraging the strengths of our employees and ensuring that we provide them with the tools necessary to be successful. We are committed to employee and organizational development by furthering our technical and leadership capabilities. In this regard, we are updating our Leadership Development program with new leadership and employee competencies, as well as teaming with a local university to establish a more formal program, customized for us, in order to better develop our future leaders. We are continuing to promote a culture of Diversity & Inclusion by ensuring a commitment to diversity in our hiring and development, and continuing to embrace and foster a workplace environment that acknowledges and respects differences.
improvements and insights into potential product or service offerings we should be exploring.
We are continuing to look for ways to improve Member engagement through Advisory Committees, Task Forces, and Subcommittees in support of the Mutual. For example, we have restructured how our Advisory Committees operate in order to optimize the amount of time that Member representatives are spending on NEIL activities. In 2016, we changed the format of our Annual General Meeting (AGM) to include the Engineering Advisory Committee (EAC) and IAC Executive Committees, as well as the Legal Advisory Committee (LAC). We also restructured the meeting by holding an Annual Policyholder Meeting in conjunction with the AGM. The improved format included a panel of the Advisory Committee Chairs along with guest speakers from the nuclear energy and insurance industries. These changes were well received by our Members, especially the ability for stakeholders from different Member companies to interact with each other at the meeting. Building on these improvements, we are expanding attendance at future AGM gatherings to include all representatives from the EAC, IAC, and LAC.
IMPROVED COMMUNICATIONS In 2016, we conducted a stakeholder analysis with our Members to ask how we could improve our communications with them. We received
Our new communications structure features streamlined accountability through the Communications Lead backed by departmental representatives to ensure alignment on issues and targeted communications to the Membership.
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Advancing Core Products and Services
One critical focus area to ensure the success of the Core Service Team model is integrating the contributions from key functional areas, including Loss Control, Insurance, and Claims. We are establishing a coherent and well-managed approach to enhance our level of service as well as the range of products that we offer our Members.
PROACTIVE LOSS PREVENTIONLoss Control and the EAC spend a significant amount of time each year ensuring the evaluations conducted at each insured site are professional, efficient, and effectively executed. In this role, our Loss Control Representatives (LCRs) are uniquely positioned to offer insights into risk management as well as auditing compliance with Standards. Working with our Members, we are challenging ourselves to enhance the NEIL value proposition through efforts such as the Project Enterprise Risk Management process. We are adding risk assessment training and professional development opportunities to equip LCRs with the tools needed to generate Loss Estimates.
As a result, we are beginning to provide objective Loss Estimates for each SHALL Standard non-compliance to ensure Members gain an enhanced understanding of the risk itself. These interactions also support developing insights into best practices for managing, insuring, or preventing losses before they occur. Going forward, we expect these Loss Estimates to provide critical information to support future underwriting and Advisory Committee risk assessments.
EVOLVING INSURANCE PRODUCTS AND SERVICESNEIL is working with the EAC and IAC to address emergent and evolving risks impacting our Members and the Mutual. As partners in risk management, we are empowering our Underwriters to assist Risk Managers in identifying and assessing emergent risks. A significant number of our Members are now utilizing or considering approved risk transfer and risk retention alternatives.
NEIL Underwriters are providing Risk Managers with greater flexibility, along with the strategic analytics, to support Member decision making and internal communications. These positive changes have been well received by our Members, citing that enhanced optionality in managing risk—particularly with respect to those risks that are less demonstrably homogeneous—should be evaluated and developed, as appropriate.
NEIL Specialty Insurance Company (NSIC) is exploring opportunities to add strategic value in these areas. We are also exploring additional ways to support underwriting Member conventional risks through our expanding network of sustainable and mutually beneficial partnerships with those who also serve our Members.
MUTUALITY IN CLAIMSOur commitment to Excellence extends beyond Insurance and Loss Prevention to exploring enhancements in Claims as well. Building on the momentum established by the 2015 Member-driven Claims Working Group, we are working with our Members to develop and implement recommendations, including Claims Professionals in critical stewardship engagements with Risk Managers, and ensuring clear lines of communication and expectations are in place and functioning before a loss occurs. Our Members are providing important guidance on preferred protocols in advance, as well as offering detailed procedures and insights to inform and compile post-loss best practices and lessons learned that we are sharing with all our Members.
NEIL has made many positive changes in our core product and service offerings to better identify, analyze, and manage risk for our Members, improve efficiency, and reduce burdens wherever possible.
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Collaborating on Risk Management
Our increasing and enhanced engagement with the Membership is demonstrating that meaningful risk management approaches apply to individual Member risks as well as to the collective risk of the Mutual. Through these efforts, we are developing a clear appreciation of the varying risk profiles and risk appetites that exist across the Membership. Discussions are reinforcing the value of leveraging alternative risk transfer mechanisms. NEIL is expanding available options, including third-party risk capacity, co-insurance and reinsurance coverage, voluntary sub-limits, as well as the use of special purpose risk structures.
In addition, working with the Advisory Committees, key risk initiatives are being advanced to the benefit of the entire Membership. The Deep Dive Policy Form Review is bringing greater clarity to the coverages and interpretation of the policy form, while the Premium Adequacy Review is ensuring annual premiums align with risk exposures. The Turbine Building Fire Protection and Project Enterprise Risk Assessment initiatives are proactively mitigating risk exposures and supporting the prevention of material losses.
At the enterprise level, NEIL’s Risk Appetite remains focused on supporting the Company’s Mission while offering the coverages needed by our Members. Recent loss experience and additional analyses, however, are showing that our net line risk retention is greater than desired. In fact, benchmarking has reinforced that NEIL’s exposure to individual events is much higher, as a percentage of policyholders’ surplus, in comparison to other insurers. In response, we are setting a goal to achieve significant reductions in net line retention as well as developing an integrated three-year risk retention strategy. We are already making progress through enhancements to our excess reinsurance treaty. In addition, we are developing program-specific Risk Appetite statements in order to provide greater clarity regarding program risk tolerances and performance expectations.
Less apparent to our Members, but equally important to our internal risk management processes, are the addition of a New Product Evaluation Framework and a Return on Risk Adjusted Capital (RORAC) model. The Evaluation Framework is providing a uniform assessment tool for the analysis of new insurance and investment opportunities, while the RORAC model is facilitating capital allocation and comparison of opportunities with varying risk levels. A good example of how we are applying these tools is the decision to consolidate our international and domestic non-Member businesses. We are positioning to exercise greater discipline in evaluating non-Member opportunities, ensuring we only pursue quantifiable value creation for our existing Members. Going forward, our strategy and risk appetite for this line of business will be clearly defined with transparent and objective metrics for measuring success.
NEIL recognizes it is in the risk business and views sound risk management practices as integral to meeting our objectives. Applying the collective experience and insights of our Members will always be part of the NEIL formula in identifying and mitigating risks to the Mutual.
Through discussions with Members, NEIL is expanding available options to leverage alternate risk transfer mechanisms including third-party risk capacity, co-insurance, reinsurance, voluntary sub-limits, and special purpose risk structures.
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Our Guiding PrinciplesMUTUALITY | Consistent with the principles of a mutual insurance company, our employees and Board of Directors strive to meet our Members’ evolving needs and represent the interests of all Members by treating them fairly and equitably in matters of the Company, including financial dealings and Member representation.
INTEGRITY | The Company, its employees, and members of the Board of Directors will treat each other, and all others with whom we interact, with respect, honesty and fairness. We will maintain the highest ethical and professional standards in all areas of our business and respect the confidential and proprietary information of our Members.
STRENGTH | We will maintain our financial strength through sound strategic planning, prudent investments, a disciplined financial decision process and demonstrated financial accountability. We will maintain our personnel strength by creating an environment that encourages employee initiative and diversity among individuals, and enables each employee to perform successfully and grow professionally.
TEAMWORK | We will foster teamwork with our Members and business partners by effective communications and by seeking their participation on matters affecting the Company. We are also committed to being responsible and active members of our community, and will team with others to build a strong community that produces a positive environment beneficial to businesses and individuals.
EXCELLENCE | Excellence requires personal commitment on the part of each individual involved with NEIL, and we pursue this through a proactive approach to all aspects of our business. Each employee commits to achieve Excellence and to respect the Company and each other in all matters.
Our Vision NEIL believes nuclear power is a vital energy solution. We enable nuclear power by embracing mutuality and pursuing excellence in insurance and loss prevention.
Our MissionWe fulfill our continuing core responsibility of insuring our Members’ nuclear risks by:
• Maintaining the financial strength to cover two full-limit losses,
• Promoting industry risk management and safety practices,
• Providing value and equitable treatment, and
• Prudently pursuing opportunities that serve the Membership.
Our Strategic Goals CORE FOCUS
• Deliver high quality products and service to the Membership
MAINTAIN THE CORE• Optimize risk-adjusted financial returns and utilization of capital resources
• Demonstrate excellence in operations and organizational human performance
• Actively manage integrated risk exposures and incorporate effective risk management practices
EXPAND THE CORE• Develop new strategic products, services, and Member relationships
LEVERAGE SURPLUS • Prudently pursue opportunities to leverage the Policyholders’ Surplus
Nuclear Electric Insurance Limited1201 N. Market Street, Suite 1100
Wilmington, DE 19801(877) 665-6345
Overseas NEIL dacEmbassy House
BallsbridgeDublin 4 Ireland D04 H6Y0
+ 353 1 637 5350
For questions, please contact us at [email protected].
