In response to recent growth in the construction of nuclear power stations and a desire to make the protection of such construction projects easier for insurers and reinsurers, the Lloyd’s Market Association (LMA) Wording Forum is looking to make wordings more appropriate for the global nuclear industry.
The LMA has announced that its Wording Forum will produce a new ‘cold zone variant’ of its model exclusion wording, which the LMA says will make it simpler for London market insurers to cover such construction projects in the nuclear sector.
Despite major incidents in the nuclear sector, such as the Fukushima disaster in 2011 and a fire at the Flamanville nuclear plant in early 2017, for example, there has been a recent revival in the construction of nuclear power stations around the globe, including the UK government approving a new reactor at the Hinkley Point site.
The LMA highlights this, and goes on to explain that of the 15 reactors in the UK that combined generate 21% of the region’s electricity, nearly half of this capacity will need to be replaced by 2025 and will need to be replaced. Including the approval at Hinkley Point the LMA says that a number of new reactors were commissioned in 2016, all of which will require insurance for the construction phase, ancillary buildings, cold zones, and also the “high radioactivity zone long before any radioactive material is actually introduced to the site.”
Alison Colver, LMA Wordings Manager, 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.”
A working group at the LMA has drafted new and revised model nuclear extensions, which are currently out for legal opinion, says the LMA.
