Nuclear Utilities Warned of Inadequate Coverage

October 1983
Risk Management (00355593);Oct83, Vol. 30 Issue 10, p86
Trade Publication
Utilities operating nuclear power facilities in the U.S. could face serious financial difficulties in the event of a major accident under additional property insurance is made available, says Roger H. Taylor, vice president of Standard and Poor's electric utilities ratings group. The specialist in utility industry finances said that, although levels of nuclear property insurance coverage are continuing to increase, available insurance protection is still inadequate to cover the potential financial losses of nuclear power plant operators, should an accident cause a plant to cease operations indefinitely. Taylor observed that the amount of nuclear property coverage available have increased significantly since the Three Mile Island accident in 1979, but it has not come far enough. He noted that a total package of less than $1 billion is available from the nuclear property insurance pools and the Nuclear Electric Insurance Ltd,. a utility-support captive insurer. Taylor cited three reasons for the need to increase property insurance capacity. Inflation has increased the cost of constructing a plant to $2 billion or more, an accident at a nuclear plant could create unforeseen costs and the costs of paying interest to bondholders and dividends to stockholders is not insurable.


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