Atom insurance: business or a need

We all definitely heard about insurance. Traveling abroad, cars, health, real estate – all this can be insured at the nearest insurance company in a matter of hours, and often even minutes. But can everything be insured?

But what about a nuclear facility that has far more risks than a bathroom flooded by neighbors from above? Which company has enough confidence and financial reason to take such responsibility? The answer to this question is simple – no one.

To insure such objects, a combination of many insurance companies is required, which could protect such objects or third parties from losses with their joint capital. Such associations are called insurance pools.

The need for nuclear insurance and the creation of nuclear insurance pools arose in the mid 50-ies of the last century, when a sharp increase in electricity consumption in Europe and the development of peaceful atom technologies led to the creation of nuclear energy as an industry and business.

In order to protect, on the one hand, the population, and on the other, business, it was recognized by a number of international conventions and national laws that the operator is absolutely responsible in the event of nuclear damage, including the financial.

How many nuclear facilities, for example, in Ukraine, can you name?

Insurance was recognized as the most optimal tool that would guarantee the operator’s ability to compensate for the harm caused. Almost all nuclear operators in countries where legal requirements are required for operators to have financial security use this particular tool.

It was at this point that insurance companies began to integrate into pools. A number of factors have become a prerequisite for this. On the one hand, these are huge insurance amounts and the catastrophic nature of possible losses. On the other hand, there are a terrible social responsibility, limited market and the need to have highly qualified experts who could assess the risks of the insurance object.

Now, 27 such pools are actively working in the world. All of them act on the principles of joint liability or on the principle of creating a centralized fund that can cover all losses in the amount established by national legislation. The central coordinating body of the world community of nuclear insurance pools is the annual Forum, and between the Forums, it is the General Affairs Committee, where all regions of the world are necessarily represented.

The global pool community is developing principles and formats for insurance and reinsurance, mechanisms for inspecting nuclear facilities, as well as organizing such inspections and regulating the interaction of pools with cross-border losses.

The main objective of the Ukrainian nuclear insurance pool is the organization and coordination of insurance and reinsurance of Ukrainian nuclear risks arising from the operation of nuclear power plants and transit transport of nuclear materials through Ukraine.

Civil liability insurance of nuclear installation operators is a prerequisite for obtaining by Ukrainian nuclear operators, including operating nuclear power plants, licenses for work, transportation of nuclear materials, as well as for the implementation of a number of international projects in the country’s nuclear energy, in particular at the Chernobyl nuclear power plant. Now, the structure of the Nuclear Insurance Pool includes 20 Ukrainian insurance companies.

On November 12 and 13, the Chernobyl NPP came under the scrutiny of experts from the global nuclear pool

The reason for this is the need for Chernobyl to obtain an insurance policy, without which it is impossible to obtain a license for the operation of nuclear fuel waste storage facilities after the completion of their construction.

The Director General of the Ukrainian Nuclear Insurance Pool, Alexander Babenko, says about the inspection and the fate of the new insurance policy for the Chernobyl NPP.

The task of inspection is to first assess the object when insuring it. In our case, this is a very complex technological object, and we conduct an engineering risk assessment here. On the one hand, we look at the hardware. It is, in principle, both throughout the world and ours, everywhere good. On the other hand, it is no secret that the human factor is the main cause of accidents and all problems, and not only in the nuclear sphere.

Therefore, we pay attention to the safety culture, the attitude of the staff to safety, to its training and all kinds of things that can lead to some kind of problems. In the end, this is a large industrial facility.

Experts who arrived at the site represent the global pooling system. There are about 20-30 such inspectors in the world. They inspect about 400 nuclear facilities around the world. In their work, they collect the best practices, see all the shortcomings and then, during the visits, recommends taking corrective measures.

Features of the insurance of the Chernobyl nuclear power plant

All requirements of both the national regulator and international organizations such as the IAEA and WANO must be met. In addition, the community of nuclear insurance pools has developed special recommendations for inspections, which indicate what the facility should look like.

The Chernobyl nuclear power plant is a unique facility in many aspects. There are no insured objects in the world after such a massive accident. In this regard, there are a number of problems that need to be addressed. For example, how to distinguish those who suffered during the previous accident, from those who suffer from the next, if such, God forbid, happens.

The second aspect is the presence of a source of uncontrolled radioactivity. This is a very big uncertainty.

Post Inspection Actions

The first stage that we can observe now is the assessment of the object by engineers. From their point of view, they must say whether this object can be insured and what degree of risk it has. After the inspection, the engineers provide a report that outlines a multilateral analysis of the facility.

Further, this report will fall into the Ukrainian Nuclear Insurance Pool, after which the risks of the facility are assessed taking into account the political, economic and market components. Then, it is determined what the tariff for insurance of this object will be and a decision is made whether to insure or not. If the decision is positive, then a new policy will be issued annually and once every 4 years, or more often, a comprehensive inspection will be conducted”.