Lack of IMO convention could make insurance 'unaffordable' for nuclear-powered ships – NorthStandard
Owners of nuclear-powered commercial vessels may face significantly high insurance premiums and even potentially “unaffordable” coverage without a dedicated international maritime convention for nuclear-powered ships, a report by UK-based marine insurer NorthStandard warns.
PHOTO: Concept of a nuclear-powered LNG carrier. American Bureau of Shipping
Marine liability coverage is primarily provided by Protection and Indemnity (P&I) Clubs and 12 such clubs, including NorthStandard, form the London-based International Group of P&I Clubs (IG).
The IG collectively provides marine liability cover for around 90% of the world’s ocean-going fleet and handles claims of up to $3.1 billion through a combination of pooled resources and reinsurance arrangements.
While the IG’s reinsurance covers a range of maritime civil liabilities, including oil spills and catastrophic events, it does not extend to nuclear-related risks such as radiation exposure or damage from nuclear fuel or waste.
Need for IMO convention
The report highlights that this exclusion stems from the lack of an established IMO liability convention for nuclear-powered vessels, which makes it impossible to secure reinsurance for such risks at a global level.
The IMO has developed several liability conventions to make sure shipowners carry insurance and that victims of maritime accidents receive fair compensation. For example, the Convention on Civil Liability for Oil Pollution Damage provides a structured framework for handling claims related to oil spills.
In the case of nuclear-related incidents, the Convention on Civil Liability in the Field of Maritime Carriage of Nuclear Material applies to the transport of nuclear substances but does not cover nuclear fuel used for propulsion or nuclear waste disposal. In addition, the Convention on the Liability of Operators of Nuclear Ships, which was proposed in 1962 to regulate liability for nuclear-powered vessels, was never ratified and so is not in force.
NorthStandard’s report argues that absence of a standardised legal structure means nuclear-powered vessels will be subject to national and regional legislation, increasing uncertainty over liability and exposure to financial risk. Insurers will struggle to assess risks without a liability cap, making reinsurance either prohibitively expensive or entirely unavailable.
“It is highly unlikely that nuclear liabilities will be capable of being insured at commercially competitive rates until the safety regulations are in place and the liability for nuclear risks is clearer,” the report stresses.
It has encouraged the UK government to push for a civil nuclear marine liability convention within the IMO framework to provide clarity on insurance and risk allocation. UK-based CORE Power, a co-author of the report, also plans to collaborate with the IMO and the International Atomic Energy Agency to develop international safety and security standards for nuclear-powered ships.
By Konica Bhatt
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