Part 1 of 2 Parts
A major issue with respect to the use of nuclear power has to do with liability insurance for nuclear accidents. There are currently three international conventions that provide the foundations for nuclear liability arrangements. These include the Paris/Brussels Conventions, the Vienna Convention and the Convention on Supplementary Compensation. Liability for nuclear disasters is limited in time and amount by these conventions and by national legislation that is largely based on the principles established by these conventions. In addition to the financial security limits imposed on operators of nuclear power plants, individual nations can accept responsibility as a nuclear insurer of last resort.
Operators of nuclear power plants are held to be liable for any and all damage caused by nuclear disasters, regardless of who is at fault. They are usually required to take out insurance for this nuclear third-party liability (NTPL). However, in the event of a major nuclear disaster, there would be limited compensation due to the lack of adequate nuclear insurance capacity to cover the full scope of the nuclear plant operators financial security requirements. In addition to these provisions for nuclear insurance, the expanding of the coverage demanded by the revisted nuclear liability conventions presents traditional insurers with significant problems. The new cover requirements seem to push the boundaries of nuclear insurability even more.
With respect to the amount of money available from insurance to deal with the aftermath of a nuclear disaster, current amounts will be exhausted long before any complete cleanup could be accomplished. Critics say that the U.S. government is protecting the nuclear industry with low time limits and low insurance amounts when they should be more aggressive in forcing responsible members of the world nuclear industry to accept responsibility for dealing with nuclear disasters.
India has stringent industrial liability laws that allow even the manufacturers of equipment involved with any industrial disaster. There laws were passed after the horrific Bhopal chemical plant disaster. In 1984, a Union Carbide India Limited pesticide plant sprang a leak. There are estimates that almost four thousand people died and over half a million people were injured.
U.S. nuclear companies have been eager to bid on the construction of nuclear reactors for India. With the power shortages and huge population, there is significant demand for new nuclear reactors. However, the stringent liability laws in India have kept U.S. companies out of building nuclear power plants in India because of the fear that settlements for any nuclear disaster in India could bankrupt them. So the improvement of international conventions for nuclear risk insurance and not just a matter of security but also future expansion of the U.S. nuclear industry.
A new report was just published with the title Study on the insurance, private and financial markets in the field of nuclear third party liability based on a study which examines the state of the nuclear liability insurance market today. The study was carried out by the Vienna-based safety and CBRN-E security consultancy firm ENCO on behalf of the EC's Directorate-General for Energy analyses the insurers difficulty with the revisions of the nuclear liability conventions. The report proposes new solutions to encourage the deployment of more nuclear liability capacity (including for the full scope of the liability.
Please read Part 2 next