The civil liability of European nuclear operators: which coverage for the new 2004 Protocols? Evidence from France

Abstract

In Western Europe, the nuclear liability is governed by two international conventions, drafted by the Nuclear Energy Agency of the OECD: the Paris (1960) and Brussels (1963) Conventions. These conventions traditionally limited the liability of the nuclear power plant operators to relatively low amounts. In France, the liability of the (state owned) operator of €91 million is covered by insurance (for €31 million) and reserves (for €60 million). A recent modification to the conventions occurred in 2004 and increased the liability limit to €700 million. In this paper we aim to evaluate the costs for covering the increased liability for the nuclear risk after the introduction of the 2004 amendments. In order to do so, we calculate the actuarial insurance premium for the nuclear risk and find that the current premium charge is very large. The paper tries to explain the high price of nuclear liability insurance. Also the costs of the own reserves for the coverage of potential nuclear accidents are examined. We then aim to evaluate the different options (mostly insurance and reserves) and indicate the optimal combination of both instruments to cover the future operators’ liability limit, introduced by the latest 2004 amending Protocols.