Law needed to address third party liability insurance for nuclear damage

The consequences of damage due to nuclear accidents are huge. After the Fukushima disaster in Japan, many nations using nuclear power are placing more emphasis on the issue of indemnity for nuclear damage by revising their domestic laws to raise the indemnity limits on nuclear damage. Third party liability insurance for nuclear damage has been the best choice for nuclear power operators to meet the legal requirements for compensation for nuclear damage.

Third party liability insurance

Compensation for damage due to nuclear accidents refers to taking liability for compensating victims for personal injury, property loss or environmental damage caused by nuclear accidents. China is one of the few nations in the world that has no legislation re compensation for nuclear damage. The State Council’s Official Reply on the Issue Regarding the Liability of Compensation for Damage Due to Nuclear Accidents (document No. 64) is generally viewed by the industry as an essential set of Chinese rules for nuclear damage compensation.

Article 8 of document No. 64 is used by the industry as a major basis for insurance companies to underwrite insurance for, and for nuclear power companies to take out insurance against, the liability for damage due to nuclear accidents. It states: “operators shall make appropriate financial assurance arrangements to ensure that they are able to discharge the compensation liability timely and effectively … in case of damage due to nuclear accidents. Before the commencement of operation of a nuclear power plant or the storage, transportation and reprocessing of spent fuels, they must take out insurance sufficient enough to meet their liability limits.”

Wang Jihong is deputy director of the Environment, Resource and Energy Law Committee, All China Lawyers Association；Liu Ying also contributed to this article