The purpose will be to help to address the considerable liability issue as the industry continues its expansion.
At the moment, there are 20 nuclear power plants in India, and as the industry continues to expand, so will the liability associated with it, causing the government of that country to take the added step to form a nuclear insurance pool that will help to address that increasing risk.
The issue of liability has been a powerful one in India, to the point that it has been a barrier in international deals.
Many potential deals with other countries have been held up because of the potential problems presented by the liability of this energy source. Now, the government of India has decided that it is time to create a nuclear insurance pool that will include the participation of several stakeholders. This is designed to help to meet the massive financial requirements that would occur in the case of a disaster.
The nuclear insurance pool was the chosen solution when no single insurer claimed to be able to provide the needed coverage.
The Indian Department of Atomic Energy (DAE) is now in discussions with the country’s Ministry of Finance following an effort to seek coverage from insurers. Among those carriers that were approached, not one – including the General Insurance Company – stated that they had the necessary resources to be able to provide the type of financial coverage that nuclear power plants would need.
As there are 20 nuclear power plants in India, and that number will be rising, there is quite the coverage required, particularly as the country’s Liability Law states that up to Rs 1,500 crore will need to be paid should there be a disaster.
This decision by the government to seek the necessary nuclear insurance to cover the plants is a direct reflection of the urgency that exists for covering the reactors, particularly the Kundankulam Nuclear Power Plant’s units 3 and 4, under the 2010 Civil Liability Nuclear Damage Act. That was an agreement that was made with Russia in order to establish those two units, which was signed this month.