What are the potential financial consequences of a disastrous accident at a nuclear power plant? And how much would an insurance company charge to cover the risks involved in operating such a facility?
These are the questions the German Renewable Energy Federation asked Versicherungsforen Leipzig, an independent organization providing research services to the insurance industry, to answer. The results of the study, conducted by insurance management experts and actuarial mathematicians and commissioned before the Fukushima disaster in Japan, have recently been made available in English.
Asked to calculate an adequate risk-adjusted insurance premium to cover the damage resulting from a major “total meltdown” accident at a nuclear reactor, the researchers accounted for potential losses due to human fatalities and injuries, loss or damage to property and environmental damage.
They based their estimates on comprehensive research and a detailed review of the available literature and evaluated, among other things, the probability and extent of the damage and weather parameters. According to their report, “conservative assumptions were made to determine the amount of damage and the likelihood of its occurrence.”
The conclusions of the study are rather startling, with damage estimates varying from a minimum of 150 billion euros to a maximum of around 6 trillion euros. It states that “the calculated sum which would have to be made available in case of a nuclear disaster is 6.09 trillion euros.”
If the resulting liability insurance premium were to be added to the cost of generating electricity at a nuclear power plant, it is estimated that the cost per kilowatt-hour would increase by between 0.14 and 67.3 euros, making nuclear energy totally uncompetitive with renewable sources.
In the end, the issue is academic. As the authors of the German study point out, “there is no way to guarantee full coverage of the risk.” They emphasize that in practical terms, nuclear disasters at atomic energy plants are not insurable. Which is, of course, why no nuclear reactor has ever been insured against the risk of disaster anywhere in the world. And it’s also why, when such disasters do occur, society at large, through the contributions of ordinary taxpayers, has to foot the bill.
Andreas is a book shop manager and freelance writer in Cape Town, South Africa. Follow him on Twitter: @Andreas_Spath
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