The Union government has launched an insurance pool of Rs. 1,500 crore, mandatory under the Civil Liability for Nuclear Damage Act to offset the financial burden on foreign nuclear suppliers in case of an accident.
- With this, several projects such as the long-pending Gorakhpur Haryana Anu Vidyut Pariyojna held up in the absence of the pool are now expected to move forward.
About the Indian Nuclear Insurance Pool (INIP):
The pool has been set up by General Insurance Corporation of India and 11 other non-life insurers, including New India, Oriental Insurance, National Insurance and United India Insurance, from the public sector, apart from private insurance companies.
- Under the pool, nuclear operators’ liability and suppliers’ special contingency insurance policies will be offered.
- With this launch, India has joined an exclusive list of countries having nuclear pools and the INIP will be 27th nuclear insurance pool in the world managing nuclear liabilities.
- The pool will address third party liability insurance under Civil Liability of Nuclear Damage Act (CLNDA) 2010 to begin with and later expand into property and other hot zone risk for which it will work in close co-ordination with nuclear power industry.
This pool will provide the risk transfer mechanism to the operators and suppliers to meet their obligations under the CLND Act. At a later stage, this pool also looks to provide reinsurance support to other such international pools.
The idea of forming a pool was mooted in early 2013 and got stuck due to differences among stakeholders on certain clauses. In 2010, Parliament passed the Civil Liability of Nuclear Damage (CLND) Act, which creates a liability cap for nuclear plant operators for economic damage in the event of an accident.
- The CLND Act provides for Rs 1,500 crore as maximum liability for nuclear damage.
- Clauses in the Act, which give the operator the right to legal recourse and allow it to sue the suppliers in case of any accident, were seen as being a major hindrance to the growth of the nuclear industry. These concerns led to the formation of the Indian nuclear insurance pool.
- The CLND Act also provides for state-run Nuclear Power Corporation of India, which operates all atomic power plants in India, to seek compensation from suppliers in an accident due to faulty equipment.
Sources: The Hindu, PIB, BS, TOI.