Part 1 of 2 Parts
A major issue with nuclear power is the question of who will pay if and when there is a major nuclear accident. This issue is being hotly debated in the global industry. Many nuclear experts believe that the maximum amount nuclear owners and operators must pay in the case of a major nuclear accident is far too low. Currently, the rest of the cost will be borne by the taxpayers.
Recently, the U.K. became the first country in Europe to invest in the next generation of nuclear fuel, with the government awarding two hundred million dollars to Urenco to build a uranium enrichment facility.
Tomasz Libront is the CEO of the Polish reinsurance broker Smartt Re which specializes in covering difficult-to-insure risks in key sectors including nuclear, conventional and renewable energy. He offered an overview of the Polish insurance market today, noting that it has the capacity to insure the risk of nuclear power plants under construction up to a maximum of seven hundred and fifty million dollars gross.
Libront said, “It is still difficult to determine the needs of the domestic nuclear sector, but with the scale of planned investments, the Polish market will need much more capacity. How much? It all depends on the insurance strategy adopted and agreements with foreign reinsurers. It can be assumed that the insurance capacity needed will be determined by the value of the probable maximum loss (PML) – which is difficult to estimate accurately at such an early stage of investment, but certainly exceeds the current capacity of the Polish insurance market by several times.”
Libront examined what can be done to encourage greater investment and capacity into the sector. He emphasized the importance of having a comprehensive, long-term strategy in place. He believes that the role of reinsurance and insurance players in the Polish market is not only to provide insurance and reinsurance capacity but also to collaborate to ensure that they play an important role in the current energy transition.
Libront continued, “Our motto at Smartt Re is to be like a compass in the difficult world of reinsurance. So, we enable the collaboration and integrate all the stakeholders. For example, our April’s Nuclear Insurance Day conference brought together the perspectives and experiences of the worlds of reinsurance, insurance, nuclear industry, and public administration from Poland and abroad in the search for sources of resilience and financial security for the Polish nuclear power sector.”
Smartt Re’s path to the insurance of nuclear power facilities has taken it through the world of conventional power including coal, natural gas, solar and wind renewable power to non-carbon nuclear. Libront noted that it has not been an easy journey. There have been many difficulties with conventional energy insurance and reinsurance since the Paris Agreement was signed in 2015.
With a better understanding of where the Polish economy is going in terms of the energy transition, Libront was sure it would be easier to get the right coverage. However, now the capacity is limited. Where there is the appetite for such risk, the prices are skyrocketing.
Please read Part 2 next