14 March 2017
Insuring the nuclear future
The LMA Wordings Forum is to produce a ‘cold zone variant’ of its model exclusion wording, which would make it easier for underwriters to cover construction projects in the nuclear sector, a move prompted by recent growth in the construction of nuclear power stations and a requirement to make wordings more appropriate for the nuclear industry of the future.
The London market’s standard exclusionary language largely dates back to the 1950s. Since then the market has seen numerous technological developments in the nuclear industry, major incidents such as the Fukushima disaster in 2011 and a recent fire at the Flamanville nuclear plant in February 2017. Despite concerns, there has been a recent renaissance in construction of nuclear power stations which has significantly shifted the landscape for insurers.
Last year saw a number of new reactors commissioned, including the UK government’s approval for a new reactor at Hinkley Point. The UK currently has 15 reactors generating about 21% of its electricity, but almost half of this capacity is to be retired by 2025 and will need replacing. Newly commissioned nuclear power stations will require insurance during the construction phase, for the ancillary buildings, cold zones and the high radioactivity zone long before any radioactive material is actually introduced to the site.
The addition of a new model nuclear wording aims to make it easier for London market insurers to cover such construction projects, whilst there are also plans to make the current market primary policy exclusions for nuclear more user-friendly.
LMA’s Wordings Manager, Alison Colver said: “Our intention is to future-proof the market’s nuclear exclusions and to give Lloyd’s underwriters more options to underwrite nuclear installations under construction. As a specialist market, we need to ensure that our model wordings allow underwriters to provide the cover needed with the expected increase in interest in nuclear over the coming years.”
An LMA Wordings Forum working group has drafted new and revised model nuclear exclusions, which are now out for legal opinion.
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Notes to Editors
For further information please contact:
James Milne, Communications Manager
Lloyd’s Market Association
T 0207 327 8405
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