nottheaverageactuary

Actuarial news and views from Cape Town and beyond

Insurance industry watches Fukushima nuclear leak closely

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After explosion of nuclear plant in Fukushima Japan, many of us might have wondered how much the damage is going to cost and who is responsible for the payment of the cost.

According to this article A, estimated loss was about US $ 500 billions and according to article B, German Nuclear Reactor Insurance Association (DKVG) partially insured Japan’s Fukushima nuclear plant to the tune of tens of millions of euros.

Article B explore further about pricing of such nuclear disaster;

“The DKVG is a complex network that draws on the resources of numerous German insurers and re-insurers. For each nuclear reactor it insures, it covers up to 256 million euros in damage to third parties.

Plant operators have to assume unlimited liability for all claims beyond that value, which is why the four large companies operating nuclear reactors in Germany – E.ON, RWE, Vattenfall and EnBW – have banded together in a sort of insurance pact.

If damages from a major incident were to threaten one company with bankruptcy, the other three would step in. The pool arrangement means that together, they’re capable of covering damages up to 2.5 billion euros.

In the event of a nuclear catastrophe in Germany, the government would only subsidize the compensation of damages “if nothing more was to be had from the insurers or the operators,” Harbrücker said.”

Main point is nuclear disaster have no upper limit for loss therefore it would be impossible for any insurance company to price it correctly. Therefore such insurance will be very expensive and not only insurer but also general publics need to also share the cost.

 

to read further visit

Article A: http://www.theecologist.org/blogs_and_comments/commentators%20/2265605/the_true_cost_of_disaster_insurance_makes_nuclear_power_uncompetitive.html

Article B: http://www.dw.com/en/insurance-industry-watches-fukushima-nuclear-leak-closely/a-14917361

 

 

 

 

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