Part 2 of 2 Parts (Please read Part 1 first)
The report discovered that between the current companies in the NTPL market, there is definitely is more than enough capacity volume to cover the obligatory financial security amounts demanded or proposed by the legal conventions. The full scope of the revised NTPL cover demanded remains unaccomplished. The report said that the risk transfer market is prevented from providing both this full scope and materially more capacity today because of the challenges of modelling and accounting for the long tail element of the revised Conventions’ NTPL cover.
There is considerable new capacity that could be available for the insurance-linked securities market for the transfer of nuclear third-party liability risks. However, the new capacity would only be available under the right structures and terms.
The report points out that there is more capacity for NTPL from insurers available. However, this only exists with triggers that identify the loss event activate cover. There is also an obligation that requires operators to purchase what additional capacity is available. The study said that the operators of nuclear power plants are very concerned that any increases security obligations will cost them a materially higher premium than they already pay.
The ENCO study recommended optimal concepts that were based on the research and analysis conducted. Those recommended concepts yielding short-term results with minimal complications include the following. All NTPL insurance policies should have single, lifetime period limits. The NTPL mutuals’ must participate with new mechanisms for reinsurance.
For the medium terms, the report suggests the following. There should be a build up of funds to cover the Paris Convention 1st tier amount or the Vienna Convention full amount for all EU member states. Creating a new catastrophe-only, EU-wide, NTPL insurance cover excess of the current legal conventions. An EU-wide protection gap entity should be established.
The study concludes with the following statement. “Implementation of these concepts, either individually or combined, will permit the deployment of materially greater NTPL capacity than is currently available; achieving this greater internalization of the costs of higher financial security amounts will enhance the credibility of the nuclear industry and offer greater private market compensation for victims of a severe nuclear accident.”
The report also notes, "However, to help the nuclear sector develop a stronger social license to operate and allow it to continue its vital contribution towards reducing global emissions, further internalization of the cost of higher financial security must be achieved. We believe this study guides the EC towards the most appropriate mechanisms that can help achieve these outcomes at a reasonable cost to the operators and ultimately electricity consumers."
There have been a lot of concern expressed about the current nuclear disaster insurance conventions. Critics point out that while current insurance sets time limits for liability, radiation from nuclear fall out can last for thousands of years. What ever time limits are set on liability, there will be residual radiation endangering public health and the environment for many years beyond any time limit that is set.