New Delhi: As India plans to increase its nuclear power capacity to 22,480 megawatt by 2031, does it have adequate insurance cover for a nuclear disaster?
According to AlJazeera, India has barely half the insurance it needs if a nuclear disaster strikes. This came to light at the nuclear insurance session of the India Nuclear Business Platform in December last year, the news site reported.
India currently has 22 active nuclear reactors, with an installed capacity of 6,780 megawatt electric (MWe). Around 20 nuclear power projects, including fuel facility cycles that are used to process uranium for use, are in the pipeline too.
Low on insurance funds
Under the Civil Liability for Nuclear Damage Act, 2010 (CLND), Rs 1,500 crore is required to compensate victims and pay for cleanup in case of a nuclear disaster. However, the India Nuclear Insurance Pool (INIP), which presently holds 11 non-life insurers and GIC Re, has collected only around Rs 700 to Rs 800 crore.
That’s barely around half the required amount. This disclosure was made at the nuclear insurance session of the India Nuclear Business Platform in December last year. The speakers in the event included representatives of Nuclear Power Corporation of India Limited (NPCIL), and leading insurance companies including New India Assurance and GIC Re.
The other public sector insurance companies in the pool are New India Insurance, United India Insurance, Oriental Insurance and National Insurance Co Ltd. The private sector companies include ICICI Lombard General Insurance, Reliance General Insurance, Tata AIG General Insurance, IFFCO-Tokio General Insurance, Cholamandalam General Insurance, SBI General Insurance and Universal Sompo General Insurance.
The INIP was set up in 2015 under the CLND legislation. Under that law, operators and suppliers of nuclear power plants are liable in case of an accident. Both must obtain insurance through the INIP, the report added.
Government-run NPCIL is the operator of nuclear installations in India. Suppliers provide manufacturing, supplies, building and design services. They may not necessarily be foreign companies.
Shortage of funds
Experts have raised concerns over the shortage of funds and the lack of oversight on the nuclear sector. They said the parties involved in managing insurance cover for the nuclear sector seem to be thinking of it as a liability to tick off their box, rather than something which needs to be prudently planned.
“The fact that the nuclear insurance pool has not even met what is required by law is concerning – it shows that the parliament is not overseeing how the nuclear sector is operating,” M.V. Ramana, professor at the School of Public Policy and Global Affairs, University of British Columbia and author of The Power of Promise: Examining Nuclear Energy in India, told AlJazeera.
“My greater concern is the approach of NPCIL and other parties involved, which seem to think of liability requirements as a box to check off, rather than something they need to prudently plan for.”
“They seem to be victims of the same ‘safety myth’ that was at the root of the inadequate preparations for nuclear accidents revealed in the aftermath of the multiple reactor accidents at the Fukushima Daiichi nuclear plant in Japan [in March 2011],” Ramana said.
AlJazeera reported that the problem of Indian insurance companies’ inability to pay for nuclear liability insurance has been brewing since at least 2014.
Since 2014, experts have also pointed to a lack of reinsurance for nuclear risk liability as one of the likely reasons for companies failing to pay their full share. (Reinsurance, often referred to as “insurance for insurance companies,” is a contract between a reinsurer and an insurer.)
In 2014, the Indian insurance companies signalled their inability to raise more than half the amount required for the pool of insurance cover, the report added.
“The insurance companies might have paid their share if the reinsurance market had supported them,” Shreyas Jayasimha, co-founder of Banglaore-based Aarna Law, told AlJazeera. “Just as individuals seek insurance for their risks, insurance companies too require to cover their risks.”
Moreover, some experts have even questioned whether the insurance cover of Rs 1,500 crore is adequate enough to insure all of NPCIL’s 22 reactors annually.
Pallavi Bedi, partner at Phoenix Legal and a specialist in energy projects, told AlJazeera, “If there is a nuclear incident where the annual limit of Rs 1,500 crore of the policy issued under INIP is partially or completely utilised, the other nuclear installations would be without full or any cover for that year.”
Business Standard had reported that a larger pool would place additional burden on government-run insurers, as private involvement is limited.
Liability issues
“In case liability exceeds Rs 1,500 crore, the government will have to pay the rest. The government owns and operates the country’s nuclear power plants for the people and is therefore responsible to them,” Prabir Purkayastha of the Delhi Science Forum, who was an expert witness for the Parliamentary Standing Committee for the Nuclear Safety Regulatory Authority Bill, 2011, told AlJazeera.
The news outlet also reported that the Indian government has limited the maximum liability, including its own, in the event of a nuclear incident, to rupee equivalent of 300 million Special Drawing Rights (SDRs) or over Rs 3,300 crore. If the liability exceeds 300 million SDRs in the event of a nuclear mishap, the government expects to meet balance claims by “access(ing) international funds under the CSC”, it added.
India joined the Convention on Supplementary Compensation for Nuclear Damage (CSC) in 2016.
However, AlJazeera reported how claims would play out at the CSC is unclear. The news outlet explained this with reference to the Supreme Court ruling on additional compensation for Bhopal gas tragedy victims.
The top court said the Union of India, as a “welfare state”, showed “gross negligence” by not “making good the deficiency” by taking out a relevant insurance policy for the victims.
Shreyas Jayasimha of Aarna Law told AlJazeera that the wording of the apex court has indicated that “there is a duty on the part of the state to ensure people are adequately insured.”