Sunday, 14 June 2015

Nuclear Insurance Pool

Why in news?
The government has launched an insurance pool to the tune of Rs. 1,500 crore which is mandatory under the Civil Liability for Nuclear Damage Act (CLND).

Nuclear Insurance Pool
  • Rs. 1,500-crore pool
  • Set up with the help of World Bank, by General Insurance Corporation of India (GIC Re) and 11 other non-life insurers
  • Policies offered: 
    • Nuclear operators liability insurance policy and 
    • Nuclear suppliers’ special contingency (against right to recourse) insurance policy.
  • It is the 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.

Why was it created?
Clauses in the CLND Act, which give the operator the Right to 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. (Section 17 (b))
Benefits of this Pool:
1. Stalled projects (like the one on Gorakhpur), can be launched
2. Help the government in achieving Prime Minister Modi’s “vision of 3X energy generation from nuclear sector in the next 5 years.”
3. Will help in building plants in north India also (less, so far) and give Nuclear Energy a pan-India reach
4. Offset financial burden of foreign nuclear suppliers.

[Source: Indian Express, The Hindu, Economic Times]

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