LIABILITY INSURANCE In 1957, when the first nuclear liability policy was issued, "the combined capacity of the pools was $60 million per nuclear incident. ... As of this writing, the maximum stands at $160 million, the level it achieved in 1979." (p.B-2) NRC Recommendation #6: Congress should investigate the potential for the private insurance pools to increase liability insurance (currently $160 million) to keep pace with inflation. (p.IV-10) "The $60 million limit as of 1957 would translate to about $200 million as of early 1982." (p.B-18) Comment: This recommendation is somewhat irrelevant given the fact that the private insurance pools already plan to have $200 million of liability coverage available by early 1985. The report goes on to elaborate on some of the problems of insuring nuclear risks: "Being apprehensive of the catastrophe potential associated with nuclear reactors, insurers, by and large, have not been enthusiastic about offering nuclear liability insurance." (p.G-15) "...growth in the supply of nuclear liabilty insurance has been retarded by the Price-Anderson indemnification program." (p.G-15) Comment: There has been some controversy over the issue of who should pay the costs of investigating claims, proposing settlements and defending insureds. Under the terms of the policies issued for nuclear liability, these costs are paid out of the $160 million policy limit. "Liability insurers normally promise to pay these expenses in addition to [emphasis in original] paying legal claims for damages up to the policy limit." (p.B-19) "Although the pools publicize $160 million of insurance to protect third-party claimants, the public does not have this much protection at the primary level." (p.B-20) COSTS OF INVESTIGATING, SETTLING & DEFENDING CLAIMS Comment: During the 1975 vote on the Act, controversy arose over whether the cost of investigating claims, proposing settlements and defending insureds should be taken out of the public compensation fund. An amendment was adopted which would prohibit these costs from coming out of the federal indemnity. (The federal indemnity was phased out in November 1982.) Although the NRC argued that the intent of the amendment was to exclude these costs from any part of the $560 million, the Department of Justice ruled that these costs could come out of both the primary insurance layer and the secondary assessment pool. NRC Recommendation #7: "Congress should clarify its intent on"...exclusion of the costs of investigation, settlement and defense of claims from the two levels of financial protection as well as the presently excluded government indemnity level." (p.IV-10) FEDERAL SUBSIDY ISSUE Comment: Criticism of the Act has often focused on the subsidy it provides to the nuclear industry. The nuclear industry claims that Price-Anderson is not a subsidy since the federal indemnification provisions have never been triggered and no federal money has been spent. After a thorough analysis of both sides of the debate, the report concludes: "Because the limitation of liability is a grant of value to licensees and those associated with them, it is a subsidy." (p.G-11) "If indemnity were to be paid, the burden would rest on the taxpayers. If damages from a nuclear incident exceeded the limitation of liability, and no further compensation was made by Congress, the burden of this subsidy would rest on the uncompensated victims of the incident." (p.III-3) Each "The size of the subsidy is a matter of speculation. subsidy has a possible value, even in the absence of a nuclear incident evoking payment of indemnity and/or activating the limit of liability." (p.III-3) "Both the possiblity of indemnity and the limitation of liability may have encouraged some increase in the number of operating facilities by reducing the financial risk facing nuclear utilities. (p.III-3) "If a company were exposed to the possibility (however unlikely) of unlimited liability arising from a nuclear accident, the cost of outside financing may very well be increased." (p.C-8) Comment: The August draft of the report included the following recommendation: "Any reestablishment of a government indemnity portion of the Price-Anderson system should be avoided if other means for raising capacity can be found." THE NUCLEAR EXCLUSION IN STANDARD INSURANCE POLICIES "Almost all property-liability insurance policies issued in the United States...exclude...claims for damage to one's home, automobile, or other insured propoery caused by radiation or contamination from a nuclear accident would not be collectible under a personal property insurance policy." (p.II-9) Comment: The use of nuclear exclusions in insurance policies has received widespread attention in recent years. The report is critical of the arguments used by insurers in support of the exclusion, and casts doubt on whether exclusions are in the public's best interest. "...the central issue is not that all property owners should buy the insurance. It is, rather, that if a property owner wants to, he or she should be able to do so." (p.F-11) "If the risk is uninsurable and compensation does not come through third-party coverage, property owners are vulnerable to uncompensated loss through no fault of their own." (p.F-14) "The mere fact that Price-Anderson is used, however, is not conclusive that this risk really is uninsurable or that PriceAnderson is the best system to tradtional insurance that could be devised." (p.F-14) Comment: The August draft included a recommendation on this: "Obtain the views of the National Association of Insurance Commissioners on the impact, if any, of the nuclear exclusion in personal lines of property insurance on the capacity and quality of nuclear liability insurance made available by the insurance industry." SABOTAGE Comment This issue was the subject of considerable debate and controversy in 1974 and is likely to be a contested issue in the upcoming debate over Price-Anderson renewal. "In December 1974...Senator Ribicoff sponsored an amendment to extend Price-Anderson coverage to harm caused by sabotage or theft of nuclear materials. Although the amendment was eliminated by the Conference Committee, The Atomic Energy Commission (AEC) was required to study the problem and make recommendations to Congress." (p.A-6) "Although certain acts of sabotage and theft are covered under Price-Anderson, there are gaps in coverage that the Ribicoff amdendment would have closed provided the nuclear material causing the contamination could be traced to a particular insured licensee. Without such proof, however, the NRC view was that any compensation to the injured public should be a government responsibility." (p.A−6) PRECAUTIONARY EVACUATION Comment: For many nuclear sites, the cost of a precautionary evacuation could be enormous. The question of who should be responsible for paying these costs is likely to be controversial. "Because neither the Price-Anderson Act not its legislative history specifically addresses this question, it is uncerain whether costs arising from a precautionary evacuation would be covered. In the absence of Congressional modification of either the definition or 'nuclear incident' or 'public liability' to specifically provide for payment of these evacuation costs, the determination of whether these costs are allowable under PriceAnderson would be made by the appropriate court." (p.I-7) The New York Times Founded in 1861 ADOLPH & OCHA, Publisher 1896-1935 WEDNESDAY, JULY 20, 1983 WASHINGTON - As New York grapples with the controversy over evacuation plans for nuclear power plants, the fundamental question is: How great is the risk? Should the public believe industry assurances that an ac'cident is so improbable that "perfect" evacuation plans are unnecessary? Or should we believe the critics, who insist on planning for the worst? The one set of experts rarely consulted are society's professional risk assessors, the private insurance industry. The insurers' response to miclear risks is both revealing and unsettling. At first glance, nuclear power appears to be "uninsurable." Every insurance policy-written for everything from homes and businesses to contact lenses-specifically excludes coverage for any damages caused by radioactive contamination. Unlike the risk of earthquakes, floods and other disasters, the public does not have the option of buying nuclear insurance for an additional premium. Not even Lloyds of London will sell it. The vulnerability of the public is compounded by an obscure federal law, the Price-Anderson Act. Under the Price-Anderson Act, the total compensation available for all off-site damages after a nuclear accident is limited to the money in an insurance pool-currently $570 million. If damages to the public Keiki Kehoe is a Washington representative of the Environmental Policy Center and coordinator of the Coalltion for Full Nuclear Accountability. A-Plants: Insurable Risks? By Keiki Kehoe exceed the amount in the pool, no one is allowed to sue the reactor operator, the company that built the plant or any other responsible party- regardless of negligence or fault. clear industry's reassurances about safety and the insurance industry's actions is disturbing. If the odds of a major accident are really as small as we are told, private insurers should be eager to write as much coverage as the public is willing to buy. Despite significant citizen pressure over the last decade, the insurers steadfastly refuse to disclose how much muclear insurance would cost if it were available to the public. It is hardly reassuring to watch the utilities who create the nuclear risk ask the public to dismiss the possibility of `an accident — while they insure their own property for billions of dollars, just in case. The public is left with a garble of mixed messages. We are asked to be |