Page 38 - The Insurance Times September 2022

making the pool a larger sink only leads to larger demand GIC Re has annual treaties with all general insurance
for greater capital from GIC-Re and the four insurance companies, which are like a promise of support to jointly
companies. Though there are seven other Indian insurance underwrite risk. It is now up to the companies to follow up
companies with stakes in the pool, such as ICICI Lombard with their own negotiations and come up with viable techno-
and Tata AIG, their stakes are narrow. The big money comes
commercial offers and contracts consistent with India's law
from the government-run New India Assurance, National
and India's practice so that reactors built with international
Insurance, United India and Oriental Insurance, each of
collaboration can start contributing to strengthening India's
which contributes Rs 3 billion to the corpus. There is a way
energy security and India's clean energy options. GIC Re has
out, if the foreign project developers are allowed to buy their
annual treaties with all general insurance companies, which
insurance covers from abroad.
are like a promise of support to jointly underwrite risk.
That route is, however, blocked since it would mean the
Because of the extra impetus given by the prime minister
foreign insurance companies would have the right to inspect
to the enhancement of atomic energy generation and
the power plants being developed in India, before they offer
setting up of new units of the reactor, the Kudankulam plant
any cover. India's offering them that path is ruled out since
has been progressively showing new constructions and
the cornerstone of its nuclear policy is that several of its
generation. "By 2024 you will have nine nuclear reactors
nuclear facilities are outside the pale of inspection by any
plus 12 new additional ones which were approved during
foreign entity. So the only option available for the project
the Covid times with a capacity of 9000 MW.
developers is to buy insurance cover through India's
Civil Liability for Nuclear Damage Act of 2010.This pool is to
Five new sites are also being identified. the present installed
address liability related concerns of suppliers under the
nuclear power capacity in the country is 6,780 MW and the
CLND Act 2010 and paving the way for Indian as well as
share of nuclear power in the total electricity generation in
foreign suppliers to participate in the Indian Nuclear Power
the country is about 3.1 per cent in the year 2020-21. The
Projects.
net zero targets are expected to be met through a
As of now, India is developing eight nuclear power projects. combination of various clean energy sources, including
Russia is already in a pole position in the market, but nuclear power. In this context, the present nuclear power
hopefully for the others, India plans to bid out more. In this
capacity of 6,780 MW is planned to be increased to 22,480
context, the meeting is expected to see more push back by
MW by 2031 on progressive completion of projects under
the attendees to relax the rules for buying insurance. India
construction and accorded sanction. More nuclear power
knows it is among the few shrinking list of countries where
reactors are planned in future.
the business is expected to grow. Switzerland, for instance
last year, has joined the list of countries to shutter its nuclear
References:
power projects in a decade. So India will want to keep its
1. https://www.business-standard.com/article/finance/
policies going. Insuring the nuclear power units at
india-nuclear-insurance-pool
Kudankulam is one of the largest insurance contracts from
2. https://world-nuclear.org/information-library/country-
India in recent years.
profiles/countries-g-n/india.aspx
The insurance cover of more than Rs.43,200 crore is sought 3. https://www.ibef.org/blogs/india-s-nuclear-energy-boom
for the under-construction units 3 and 4 of the Kudankulam
4. https://www.jagranjosh.com/general-knowledge/list-of-
Nuclear Power Plant. The annual premium is more than
nuclear-power-plants-in-india
Rs.150 crore. The amount of the policy, at Rs.43,200 crore,
5. https://www.tribuneindia.com/news/delhi/nuclear-
is itself huge and enough to entice the largest global
power-capacity-to-treble-by-2031
reinsurers. Under law, New India cannot approach another
reinsurer without GIC Re's permission. Reinsurers 6. https://www.letsstudytogether.co/nuclear-power-plants-
underwrite risks that are too large for insurance companies india/
to handle on their own. This allows insurers like New India
7. http://www.nuclearbusiness-platform.com/india/
to obtain more business than they would otherwise be able
nuclear-industry/india-nuclear
to. GIC Re's first right of refusal under law means local
8. IRDAI Annual Report 2020-21
general insurance companies such as New India must first
approach it to back them before taking large risks. 9. Newspapers & Journals
38 The Insurance Times, September 2022