nuclear-news

Who will pay for the Japanese nuclear damage? Not Insurance!

Insurance policies often exclude certain factors from coverage….exclusions on earthquake damage in the property insurance for reactors and exclusions on nuclear damage for homeowners’ insurance policies…..What remains is likely to be an international liability pool, where reactor operators insure each other against claims in situations like this one. How deep that liability extends is unknown, however — Japan is not a party to major international conventions limiting the nuclear liability of operators.

Insurance industry likely spared Japan nuclear threat | Reuters, 13 March 11, “……….most experts agree the growing threat of disaster from damaged nuclear reactors is unlikely to have much effect on the mainstream insurance business because of the way insurance for the nuclear power industry is structured.

Insurance policies often exclude certain factors from coverage, and that will probably occur in this case — exclusions on earthquake damage in the property insurance for reactors and exclusions on nuclear damage for homeowners’ insurance policies.

What remains is likely to be an international liability pool, where reactor operators insure each other against claims in situations like this one. How deep that liability extends is unknown, however — Japan is not a party to major international conventions limiting the nuclear liability of operators.

Generally speaking, the insurance industry does not model the potential for nuclear accidents when it looks at the effects of disasters in areas with nuclear power.

“The scrambling of the reactor is a huge event that’s really difficult to model,” Eqecat senior vice president Tom Larsen said in an interview. He said any impact was more likely to be felt by life insurers than property insurers.

$100 BILLION ECONOMIC LOSS

Even without the nuclear threat, though, there is plenty of scope for damage claims of historic proportions.

About $24 billion of insured property is located in the 3 km (1.8 mile) band along the coast of the four prefectures, or states, most affected by the quake, Jayanta Guin of disaster-modeling firm Air Worldwide told Reuters. There is about $300 billion of insured property in the four prefectures most affected by the quake’s shaking…..

Insurance industry likely spared Japan nuclear threat | Reuters

March 13, 2011 - Posted by Christina Macpherson | business and costs, Japan