Willis has launched Capacity Revenue Protection, a parametric insurance solution designed to cover the revenue losses that PJM energy producers face when physical damage reduces their accredited unforced capacity and traditional policies fall short.
The product targets a previously underinsured exposure. When physical damage causes a generator's UCAP to fall, the resulting reduction in capacity payments can persist long after physical repairs are completed, typically lasting 12 to 18 months through PJM's recertification process.
Standard property and business interruption policies are generally structured around the repair period and do not extend to cover this prolonged revenue drag. The company said Capacity Revenue Protection is designed to close that gap using a parametric structure aligned with PJM's market dynamics and capacity rules to deliver predictable cash flow support during recovery.
"PJM's capacity framework is undergoing meaningful change, and producers need tools that match the realities of today's market," said Brian Fitzgerald, director and senior property and nuclear insurance broker at Willis. "Capacity Revenue Protection gives our clients a way to protect revenue long after the physical repairs are complete. It's a forward-looking solution built to support financial stability in a period of heightened uncertainty."
Beginning with the 2025/2026 delivery year, PJM introduced a new Effective Load Carrying Capability accreditation methodology that calculates a generator's capacity value based on its historical ability to perform at times of highest system risk. The practical effect is that UCAP values are more dynamic and more exposed to performance-related adjustments, including those triggered by physical damage. A generator that suffers damage and cannot demonstrate reliable performance through the recertification cycle faces a prolonged reduction in its accredited capacity and, consequently, in its capacity revenue.
Standard property damage and business interruption policies cover repair costs and lost revenue during the repair period. They are not structured to follow the administrative and regulatory timeline of PJM's recertification process, which can extend the financial impact well beyond the physical recovery. That mismatch between what traditional insurance covers and what the market exposure actually demands is the structural problem Capacity Revenue Protection is designed to solve.
Meanwhile, the parametric approach is well suited to this exposure. Rather than requiring loss assessment against a fluctuating indemnity baseline, a parametric structure pays based on predefined, measurable triggers aligned with PJM's own data and market rules, providing the predictability producers need to model cash flow through a recovery period.
The parametric approach is well suited to this exposure. Rather than requiring loss assessment against a fluctuating indemnity baseline, a parametric structure pays based on predefined, measurable triggers aligned with PJM's own data and market rules, providing the predictability producers need to model cash flow through a recovery period.
PJM itself acknowledged the structural pressures on its market in May 2026, with President and CEO David Mills stating that "the current situation is not tenable" and that "the region has years, not decades, to make these choices deliberately", proposing three broad frameworks for capacity market reform.
That uncertainty further reinforces demand for financial tools that can operate independently of shifting market rules while remaining aligned with PJM's current structure.
The launch reflects the wider energy insurance environment. Willis's April 2026 Energy Market Review reported that upstream capacity had reached a historic $10 billion, but that even $6.8 billion in downstream gross losses in 2025 had not triggered a hardening in prices.
In a market where conventional energy cover remains competitively priced and broadly available, specialist parametric solutions targeting structural coverage gaps represent one of the clearer avenues for product innovation, both for brokers seeking to add value and for producers navigating an increasingly complex capacity market.
Willis has been active in developing parametric solutions across multiple sectors. In October 2025, the firm launched a parametric policy for UK and Irish businesses that triggers automatically when a red weather warning is issued by the Met Office or Met Éireann, reflecting a broader strategic commitment to using parametric structures for exposures that traditional indemnity cover cannot efficiently reach. Capacity Revenue Protection extends that approach into one of the most consequential and fast-changing markets in US energy today.
