NTPL Insurance Capacity Available

• Author: Directorate-General for Energy (European Commission), ENCO
• Pages: 24-41

Final Report - MOVE/ENER/SRD/2016-498 Lot 2

Study on the insurance, private and financial markets in the field of nuclear third party liability

Page 24

4 NTPL INSURANCE CAPACITY AVAILABLE

4.1 FINANCIAL SECURITY FOR NUCLEAR SITES

Most legal regimes demand that car drivers have third party liability insurance; this insurance is to cover the

policy holder for any claim brought against him/her by a third party  someone unrelated to the insurance

contract. For example, if the policy holder has an accident and his/her car hits either a building or another

person, then the owner of the dam aged building or the injured person (the third parties) will probably make a

claim against him/her. The third-party insurance policy will cover the driver against such a claim.

It is well known that most countries with nuclear sites have legal regimes that provide similar arrangements.

International nuclear liability Conventions35 and/or national nuclear laws provide a broadly consistent legal

regime that requires financial security for nuclear sites to pay compensation for damage resulting from an

incident that affects any third parties. To operate an active nuclear site in most nuclear states, the owner of that

site must demonstrate to the appropriate regulatory authority that financial security up to the amount

demanded by law is in place; the financial security is generally, but not exclusively, provided by insurance36.

4.2 REGULATORY FRAMEWORK

That the nuclear industry is heavily regulated is undeniable; national nuclear regulators37 govern much of the

day-to-day activity of nuclear sites globally, often including their financial security requirements. The third-party

legal and regulatory framework for the nuclear industry and its ramifications for nuclear operators, suppliers,

lawyers and governments have been analysed, written about and opined upon exhaustively for decades; further

such work is not the purpose of this study. This is an insurance-led study that will focus on the insurance aspect

of the nuclear liability regimes.

In most countries, insurers are regulated by a financial services regulator; in the EU the principal financial

services regulator is the European Insurance and Occupational Pensions Authority (EIOPA); EIOPA is part of a

European system of financial supervisors that is comprised of three European Supervisory Authorities, one for

the banking sector, one for the securities sector and one for the insurance and occupational pensions sector38.

35 As noted in the introduction, the 3 basic NTPL Conventions are: 1960 Paris Convention on Third Party Liability in the Field of Nuclear

Energy, 1963 Vienna Convention on Civil Liability for Nuclear Damage, 1997 Convention on Supplementary Compensation for Nuclear

Damage.

36 For example: 1960 Paris Convention, Art. 10 (a); 1963 Vienna Convention Art.7 (i): Convention on Supplementary Compensation,

Annex Art.5.1(a).

37 For example: the Nuclear Regulatory Commission in the USA (NRC - see: https://www.nrc.gov/); Radiation & Nuclear Safety

Authority in Finland (STUK  see: https://www.stuk.fi/web/en).

38 See: https://eiopa.europa.eu/about-eiopa

Final Report - MOVE/ENER/SRD/2016-498 Lot 2

Study on the insurance, private and financial markets in the field of nuclear third party liability

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EIOPA's main responsibilities are to maintain stability of the financial system, to ensure transparency of markets

and financial products as well as the protection of policyholders, pension scheme members and beneficiaries39.

Today, one key aim of EIOPA is the implementation of the new Solvency II supervisory regime for insurance and

reinsurance entities within the EU, which introduces an EU-wide harmonised regulatory regime for insurance

and reinsurance. Part of this regulation includes a risk-based capital regime for insurance firms40, designed to

ensure any entity has enough financial resources to meet its obligations; day-to-day supervision of this element

is left to national financial supervisory authorities.

A risk-based capital regime is a system of assessing the necessary amount of capital appropriate for an insurance

entity to support its overall business operations in consideration of its size and risk profile; it is an important

concept to understand in the field of nuclear third-party liability  more information on this topic can be found

in Technical Annex 5.

4.3 GLOBAL AND MAXIMUM CAPACITY WITHIN THE EU FOR THE CURRENT LEGAL

REGIMES

A comprehensive spreadsheet analysis o f the current global capacity availability in the EU MS with operating

nuclear power plants is shown in Annex E.

For the purposes of this section of the study, the existing legal regimes in the EU are assumed to be those that

require:

i. F            

property and bodily injury41;

ii. A              G

iii. The time permitted to bring a claim is no longer than 10 years after the nuclear incident/occurrence.

Of course, some countries have already ratified the 1997 protocol to amend the Vienna Convention and/or the

Convention on Supplementary Compensation, but Romania is the only EU MS with operating nuclear power

plants in this category and there the insurers do not cover the 10-30 year period to bring a bodily injury claim.

The previous section and associated Technical Annexes contain descriptions of the capacity providers for NTPL

insurance. Any global capacity available from non-EU insurance markets for EU nuclear sites is mostly provided

by non-EU nuclear pools (a listing of all the pools is shown in annex F ); this additional capacity is provided as

reinsurance of each EU MS national pool. The US mutual NEIL was the only self-insurance capacity provider from

outside the EU.

Table 5 below summarises the maximum capacity available from all sources for the current legal regime heads

of damage.

39 Ibid.

40 https://www.nortonrosefulbright.com/en/knowledge/publications/f12a4a4a/ten-things-you-need-to-know-about-solvency-ii

41 As specified in the 1960 Paris Convention on Third Party Liability in the Field of Nuclear Energy and/or the Brussels Supplementary

Convention and/or the 1963 Vienna Convention on Civil Liability for Nuclear Damage.