According to industry players, the pool could be delayed since there is no pressing need for an immediate cover. A senior official of a public general insurance company said after Kudankulam, no other contracts have been signed for nuclear reactors. The official added they were hopeful of having a cover in place before any future contract comes into being.
Having a nuclear pool would also mean inspection by foreign re-insurers. This, according to another insurance executive, is an area of contention for the government. Because of this clause, government officials may not be in a rush to set up this pool, said a senior public general insurance company executive.
General Insurance Corporation of India (GIC Re) is the proposed manager of the pool, which will have an initial corpus of Rs 1,050 crore. Earlier this year, GIC Re Chairman and Managing Director A K Roy had said Rs 350 crore would be provided towards the corpus, but the remaining amount would have to be pooled from elsewhere.
He had said talks were on to find a solution. Roy said the pool would cover the operators of nuclear plants as stipulated in the Civil Liability for Nuclear Damage Act. “There are issues with respect to recourse for equipment suppliers, if there is a liability. This has been contested in the US and Russian markets, with Indian providers also raising concerns now,” said Roy.
Roy added when the pool was formed, the cover will only be provided to operators and not the supplier. He pointed out the global pool also provides only one cover.
“We are in talks with the international pool authorities and market players and are committed to creating a pool. Since the quantum of the risks associated with nuclear generators are huge, we will have to join the global pool,” said Roy. The Indian Nuclear Energy Pool will be well-knit with the global pool, and will provide cover for both hot zone (radiation and nuclear reactors) and cold zones (outside reactor areas).
Once this pool is set up, there would be a collaboration between the national and international pool for sharing the risks. Both the entities will share each other’s liabilities.
At present, nuclear reactors in India have covers for zones that are outside the area of radiation and nuclear reactors. This is due to the lack of underwriting data on the liability for the hot zones. Once the nuclear pool is in place, the premiums will go into the pool, and cover for hot zones and its liabilities will be provided.
In 2010, Parliament passed the Civil Liability for Nuclear Damage Act, which creates a liability cap for nuclear plant operators for economic damage in the event of an accident. It also leaves nuclear suppliers free of most liability. Industry experts had said that both nuclear operators and suppliers should be jointly held liable for civil damages in case of an accident.
The Act also provides for state-run Nuclear Power Corporation of India, which operates all the nuclear plants in India, to seek compensation from nuclear suppliers in case of an accident due to faulty equipment. Kudankulam Nuclear Power Plant in Tamil Nadu, the 21st nuclear power reactor in India, will not be covered under this pool, because its contract was signed much before the Act was passed. However, this plant has been covered for its non-radiation zones or cold zones.