The UK nuclear risk insurance pool has increased its capacity to EUR1.2bn ($1.39bn) to comply with new requirements for the nuclear industry to compensate victims of an accident.
The pool’s capacity will stand enhanced to EUR700m from 1 January 2022 and will rise incrementally to EUR1.2bn in five years. The present capacity is EUR200m and was set in 2004.
This rise in capacity follows over two decades of discussions with government, the nuclear sector and nuclear risk insurers (NRI) members to establish how the UK can meet liability extensions for nuclear operators under the 2004 Protocol Amendment to the Paris Convention. The NRI pools the capacity of 29 nuclear risk underwriters and Lloyd’s syndicates.
NRI said its capacity has increased in line with the requirements and can now “provide cover for all the new heads of damage identified by the revised Paris Convention”.
However, NRI said it is not commercially viable for the private insurance market to cover Paris Convention amendments that extend the discovery period for bodily injury claims and loss of life from nuclear incidents to 30 years, from the current protocol of 10 years.
The UK government has agreed to cover the additional risk beyond 10 years but NRI said it will consider how the commercial market could cover this in future. In particular, it has proposed a trigger clause.
“Without a trigger, the 30-year discovery period mandated locks capital up for many years, making the long period to realise earned premium less attractive for insurers,” NRI said.
“NRI will continue to lead discussions and work with the civil nuclear sector and government to agree the best long-term allocation and sharing of this complex risk.”
NRI said the increase in capacity for the nuclear sector will also support the industry’s growth in providing low-carbon energy.
“With the replacement of fossil-fuel power generation with more renewable, but intermittent, power sources like wind and solar, nuclear is crucial to provide reliable baseload power,” it said. M