Energy Savings Insurance (ESI)

[Halpert]

Anybody know of a market that will insure the guarantee of an energy efficent project? Thanks!

[yoyowordup]

My guess is that would have to be a performance/payment bond guaranteeing a contract.

[WorkComp&Sense]

Halpert,

Chartis Insurance Group (formerly AIG Domestic P&C) offers a product called System Peformance Insurance.

You did not mention a particular State so the Northeast contact is Allen Zdroik, (212) 458-8261. Details of the product as well as a brochure of the coverage is available online.

Good luck with it.

WorkComp&Sense

[justthere]

If it is the bond you are looking for and you are in California, good luck. Our fabulous politicians put into law that the bidder must guarantee the work on Government solar projects for 20 years. This means the bond has to be in effect for that long. We have one client in that position and the best quote we received was 80% collateral and a 3% rate.

[Halpert]

Thank you WorkComp&Sense. I was hoping to find a company that would issue a bond but the Chartis program may work. I appreciate your help!

Halpert

[Halpert]

It turns out that Chartis is not a market for this risk. Any other feedback would be appreciated. Thanks.

Halpert

[alexbell]

Ever find a carrier interested in writing ESI coverage? I am not surprised that AIG (Chartis) is out of that business. The System Performance Insurance (SPI) was a joint venture with HSB and went away when HSB was bought by Munich Re. Also SPI was only targeted at short tail exposures for proven technology.

[Esmond]

Hi,
If you are looking for and you are in California, good luck. Our fabulous politicians put into law that the bidder must guarantee, the work on Government solar projects for 20 years. This means the bond has to be in effect for that long.

[mackubb]

If you are looking for a performance warranty type of option you can always look at GCube or Powerguard. Hannover Re and Munich Re have products but all polices come at high premiums. Usually they are implemented to service the debt in case of default. Some financial institutions are now requiring such polices in order to gain financing of said projects.

Scott A. McClure
HUB International - Los Angeles

[Anthoney]

I think it is new kind of insurance plan or atleast not in my vocabulary. But you are on the right track to find its details and all pros and cons about it.

[PGrogan]

Halpert,

Energy Savings Warranty is a new insurance policy that serves as a backstop to the performance guarantees offered by Energy Services Companies (ESCOs) or other efficiency contractors. It’s somewhat similar to Energy Savings Insurance (first introduced in the 90’s) but has a few significant structural differences that result in better coverage and a more reasonable/affordable pricing mechanism. The U.S. exclusive program administrator is Energi Insurance Services, located in Peabody, and the policy is written on Inter Hannover paper (AM Best “A” rated), a subsidiary of Hannover Re.

With regards to solar contractors and performance guarantees, Energi also has a Solar Installation Performance Warranty that insures the design/installation work of PV contractors. Someone had mentioned that California requires a 20 year performance guarantee – but in reality it is only a 10 year mandated performance guarantee. For more information on these programs, I suggest you check out Energi’s website: (http://www.energi.com/).

[robmejia]

According to an article I read, like any other insurance, ESI has its risks and coverages. Below are a few of them:

- Not performing maintenance on building systems which has been shown time and again to be required to ensure that the systems are operating as designed and to their maximum efficiency
- Physical damage to building systems including water damage and wear and tear showing a lack of maintenance
- Misuse or vandalism to building systems
- Changes to the project that increase energy usage

[sethm]

I think there's a need for such insurance. In fact, energy savings insurance was first offered many many years ago, but failed to make impact in the energy efficiency marketplace because most of the work was being done in the market by large energy service companies (ESCOs).