Page 8 Of great concern to insurers are recent statutory proposals and judicial decisions which substitute novel theories of pinpointing causation in cases involving undocumentable low level exposures to substances that may be linked statistically to increased cancers in certain groups of persons. The Nuclear Pools have commissioned a study by Arthur D. Little, Inc. The study finds these proposals unsound from a scientific point of view. The study is being printed and will be available shortly. Finally, the Pools would look upon abandoning the original and present principle of a combined single limit for both liability payments and claims handling costs as most disturbing. It would have but one effect: a reduction in the amount of our third party liability insurance capacity with a probable increase in cost. We cannot understand the merit of the proposal from an insurance point of view or why it attracts support. We are not dealing with ordinary insurance, but a unique, specially designed program designed to make the most insurance available for the protection of the public under difficult circumstances at the lowest cost. VII Concluding Remarks We believe that if Congress wishes to continue to encourage the development of nuclear power while taking reasonable steps to protect the public, the existing Price-Anderson program affords a sound base, and we would continue to support it. We would not be able to support radical changes in the program, and we would express the hope that the emphasis will be placed on measured increases in the amount of financial protection that can reasonably be achieved by insurers and a healthy nuclear power industry, confident that the government wants the program to go forward. We know this is a complex subject. We will most willing to furnish the Committee with any additional information on its insurance aspects that the Committee may desire. 1. 2. NOTES Samuelson, ECONOMICS, McGraw-Hill, Tenth Edition, p 41. As a result of the Three Mile Island accident, by far the worst nuclear THE NUCLEAR LIABILITY CLAIMS Donald Gourley (Three Mile Island Claim Coordinator-ANI and MAELU) Chub Wilcox (Attorney-Pepper, Hamilton & Scheetz) Joseph Marrone (Vice President & General Counsel American Nuclear Insurers) November 1983 Copyright 1984 by American Nuclear Insurers Report to American Nuclear Insurers and Mutual Atomic Energy Liability Underwriters. THE NUCLEAR LIABILITY CLAIMS EXPERIENCE OF THE NUCLEAR INSURANCE POOLS American Nuclear Insurers (ANI)' and Mutual Atomic Energy Liability Underwriters (MAELU) are insurance pools that have provided nuclear liability insurance to the nuclear industry since 1957. Each pool has about 140 domestic insurance companies as members and reinsures about half of the risk it assumes with foreign reinsurers, including 17 similar nuclear pools abroad. For convenience, ANI and MAELU are collectively referred to as "the Pools" in this report. The Pools have cooperated closely to provide the maximum nuclear liability insurance to the nuclear industry, and in underwriting and inspecting risks, and in servicing nuclear liability claims. The Pools are the sole source of nuclear liability insurance for non-governmental activities in the U.S. involving significant nuclear hazards. In addition to insuring the operation of nuclear powerreactors, the Pools insure fabricators of nuclear fuel, companies that handle or store nuclear waste, nuclear research and development facilities, and the suppliers of goods and services to nuclearfacilities. Companies involved with the mining and milling of uranium and the thousands of users of small quantities of nuclear materials in industry and medicine do not pose significant nuclear hazard to the public and are thus not insured by the Pools. Such activities are routinely covered by conventional insurance companies as part of the usual liability insurance they make available. The nuclear liability claims this report describes then, have arisen out of nuclear activities involving larger quantities of nuclear material which have generally been considered to be more hazardous though it is recognized that an accident which causes the release of large amounts of nuclear material from an insured facility is very remote. To be sure, there is a range of activities insured by the Pools in addition to nuclear power reactors with some posing less hazard than others. Almost all of the facility operators insured by the Pools have in common being licensed to handle nuclear material by the Nuclear Regulatory Commission (NRC) under the Atomic Energy Act. Operators of power reactors, commercial research and development reactors and fabricators of nuclear fuel who process plutonium, are required by the NRC to provide evidence of financial protection for the public. They have chosen to provide the financial protection by purchasing nuclear liability insurance from the Pools. All other insureds of the Pools, those posing lesser hazards to the public, are not required by the NRC to provide evidence of financial protection for the public. but have nevertheless chosen to purchase nuclear liability insurance. Since the Pools have provided nuclear liability insurance to the entire private sector of the nuclear industry as outlined above, the claims history recounted in this report is relevant to policy decisions regarding the nuclear industry which may be made by the Congress and the NRC. What follows is divided into two sections and a summary. Section I contains a general description of all incidents reported to the Pools which either gave rise to nuclear liability claims, or which were considered as possibly giving rise to such claims. Section II describes the Pools' response and the payments made to the public under the Price-Anderson Law as a result of the accident to unit 2 at Three Mile Island (TMI-2). Section I - Description of Claims History The chief nuclear activity of interest regarding safety has been with respect to the operation of nuclear power reactors and their potential for causing injury or damage to the public. Table 1 lists all incidents reported to the Pools since 1957 which either gave rise to liability claims or which were considered as possibly doing so. The costs resulting from each claim for the expense of investigation and defense, and for indemnity payments to the claimants are stated. An entry in the last two columns of Table 1 indicates whether a claim or incident file is open or closed. The word "incident" used in this report is a broader term and encompasses much more than does the word "accident"; the latter is generally restricted to meaning unintended, fortuitous events. "Incident" while including such events, is not so restricted though it implies a specific happening. The term is used even more broadly in this report to characterize all claims as if each claim arose out of an identifiable specific event. In fact, while some of the claims summa rized in Table 1 arose out of identifiable "incidents," many did not, and some of the specific untoward events, or “incidents" reported by insureds to the Pools did not result in any claims. The latter have been recorded if the Pools' staff believed that claims had a possibility of developing from the reported incident. Thirteen of the total of 105 reported incidents resulted in no claims being asserted, and in 8, the incident was outside the scope of coverage provided by the Pools' policies. Thus there have been 83 incidents reported which actually gave rise to covered claims, and of these 59 involved either operations at a nuclear power reactor or the transportation of nuclear material to or from such a reactor. Incidents arising in connection with power reactors are indicated by “(R)” in Column 1. Claims asserted which have been outside the scope of coverage have included, for example, instances where radium or source material (natural uranium and thorium) was involved. Radium is not covered under any Pool policies, and source material is covered under some of them. In other instances the complaint did not allege bodily injury or property damage caused by the nuclear energy hazard, or if it did, the alleged exposures occurred before the Pools' policies became effective. The number of claims asserted against the Pools' insureds accelerated rapidly after the accident involving Unit 2 at Three Mile Island (TMI-2). In the 22 years of the Pools' operations prior to TMI-2, 39 incidents were reported of which 28 gave rise to covered claims, and in the four and one-half year period following, there have been 65 additional incidents reported of which 55 gave rise to covered claims. Thus, there was an average of less than one and one-half reported incidents a year giving rise to claims for the first 22 years prior to the TMI-2 accident, and an average of about one a month since. The number of incidents giving rise to claims in the four and one-half years since the TMI accident has been about double the number in the first 22 years of the Pools' operations. Only one incident involving a nuclear reactor resulted in payments to the public, and this of course was the accident involving Unit 2 at Three Mile Island on March 29, 1979. (Incident Number 40 in Table 1). |