What If China Has a Fukushima?
China
has never suffered a Three Mile Island-like nuclear power plant
accident, much less a Chernobyl meltdown or a Fukushima disaster.
But
now that the government under Premier Li Keqiang has put the country on
a fast-track for nuclear power development, with dozens of new reactors
scheduled to launch by 2020, the insurance industry is focusing
attention on the difficult question “what if?”
China’s
insurers have been taking a cue from the National People’s Congress,
the nation’s top legislature. A special panel under the NPC’s
Environmental and Resources Protection Committee was recently ordered to
draft a nuclear safety law, the nation’s first, with a built-in
framework for power plant accident compensation.
NPC Standing Committee Vice Chairman Shen Yueyue said in February the law has reached the legislative agenda.
Zuo
Huiqiang, general manager of the Chinese Nuclear Insurance Pool,
expects the law to be enacted within two years. The 15-year-old CNIP is a
collaborative effort of 25 Chinese insurance companies including China
Reinsurance Group, Peoples Insurance Company of China and Ping An
Insurance Co.
“During the early period for
nuclear power development,” Zuo said, “coming up with plans for what to
do if something goes wrong is the responsible thing to do.”
Certainly,
there’s plenty of work to be done in the insurance arena to make sure
China’s has a compensation response plan in place before an accident
occurs. For example, liability caps for China’s nuclear accident
insurance policies are now the lowest in the world.
Under
a 2007 State Council directive spelling out nuclear accident
compensation plans, any of China’s 19 nuclear power plant operators such
as China Guangdong Nuclear Power Holding Co.(CGN), operator of the Daya
Bay Nuclear complex in the southern province of Guangdong, and China
National Nuclear Corp. (CNNC), which runs the Qinshan nuclear power
plant in the eastern province of Zhejiang, must have insurance that
covers financial losses and injuries up to 300 million yuan. If a
legitimate compensation claim exceeds that maximum liability, the
central government will provide up to 800 million yuan extra to cover
the costs.
“Liabilities of 300 million yuan
or less are to be assumed by nuclear operators, and the government is
responsible for the next 800 million,” Zuo said. “Even though there’s no
clear wording for anything over 1.1 billion yuan, the public nature of
nuclear accidents almost definitely means that the government will bear
the burden.”
Thus, the 2007 directive in
effect is a form of government policy support for the nation’s nuclear
plant operators. But because of the nation’s liability caps, the level
of support is relatively modest compared to what’s in place in other
countries that use the atom to generate electricity.
China’s
limited liability insurance system stands in sharp contrast to the
unlimited liability coverage that protects the public in Germany,
Switzerland, Japan, Belgium, Russia and the United States.
All
other countries with nuclear power around the world, including Britain
and Spain, have a limited liability system like China’s.
The
Chinese insurance pool’s direct underwriting capacity is a respectable
US$ 898 million, behind only Japan, Britain and Switzerland. In terms of
compensation caps, Belgium has the highest at US$ 1.5 billion, followed
by Japan and Switzerland at US$ 1.2 billion each.
In China, a lot more money would be needed to cover damage in the event of a major catastrophe.
“If there’s ever a problem, this liability limit will certainly be too low,” said Liu Yubo, CNIP’s deputy general manager....
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