The proposed nuclear risk pool that will be set up in India will have insurance companies including General Insurance Corporation of India (GIC), New India Assurance, Oriental India Insurance, National Insurance and United India Insurance providing half of the capacity for the Rs 1,500 crore pool, while the rest will come from the government.
Prime Minister Narendra in his media statement during Joint Press Interaction with President of United States of America said that the the civil nuclear agreement was the centrepiece of our (India-US) transformed relationship, which demonstrated new trust.
“In the course of the past four months, we have worked with a sense of purpose to move it forward. I am pleased that six years after we signed our bilateral agreement, we are moving towards commercial cooperation, consistent with our law, our international legal obligations, and technical and commercial viability,” he said.
Insurance executives said that the pool will be operational whenever there is a need for it by the suppliers and operators.
G Srinivasan, Chairman and Managing Director of New India Assurance explained that the five insurance companies will contribute Rs 750 crore capacity for the nuclear pool and the rest Rs 750 crore to be provided by government. “This will cover both operators and suppliers and will be functional as soon as the need arises,” he said.
The Indian Nuclear Energy Pool is meant to insure risks from nuclear reactors. While the idea of forming a pool was mooted in early 2013, it had reached a deadlock owing to differences among the stakeholders on certain clauses.
On one side while there were not many nuclear contracts signed, insurers were hopeful of having a cover in place before any future contract comes into being.
Having a nuclear pool would also mean inspection by foreign re-insurers. This was area of contention, but sources added that this provision is being worked out.
This pool would cover the operators of nuclear plants as stipulated in the Civil Liability for Nuclear Damage Act. Earlier, there were also issues with respect to recourse for equipment suppliers, if there is a liability. This was contested in the US and Russian markets, with Indian providers also later raising concerns.
It was earlier proposed that when the pool was formed, the cover will only be provided to operators and not the supplier.
These insurers were also in talks with the international pool authorities and market players for this purpose. Since the quantum of the risks associated with the nuclear generators was very high, they were looking to join the global pool.
The Indian Nuclear Energy Pool will be well-knit with the global pool, and will provide cover for both hot zone (radiation and nuclear reactors) and cold zones (outside reactor areas).
Once this pool is set up, there would be a collaboration between the national and international pool for sharing the risks. Both the entities will share each other’s liabilities.
At present, nuclear reactors in India have covers for zones that are outside the area of radiation and nuclear reactors. This is due to the lack of underwriting data on the liability for the hot zones. Once the nuclear pool is in place, the premiums will go into the pool, and cover for hot zones and its liabilities will be provided.
In 2010, Parliament passed the Civil Liability for Nuclear Damage Act, which creates a liability cap for nuclear plant operators for economic damage in the event of an accident. It also leaves nuclear suppliers free of most liability. Industry experts had said that both nuclear operators and suppliers should be jointly held liable for civil damages in case of an accident.
The Act also provides for state-run Nuclear Power Corporation of India, which operates all the nuclear plants in India, to seek compensation from nuclear suppliers in case of an accident due to faulty equipment. Kudankulam Nuclear Power Plant in Tamil Nadu, the 21st nuclear power reactor in India, will not be covered under this pool, because its contract was signed much before the Act was passed. However, this plant has been covered for its non-radiation zones or cold zones