Nuclear Power PlantsNuclear Power PlantsNuclear Power PlantsNuclear Power Plants

Third Party Nuclear Liability Third Party Nuclear Liability InsuranceInsuranceThird Party Nuclear Liability Third Party Nuclear Liability InsuranceInsurance

Richard Jones

American Nuclear Insurers

ANI PolicyholdersANI Policyholders(U.S. Business)(U.S. Business)

Power ReactorsPower Reactors 103103 Support FacilitiesSupport Facilities 125125 Suppliers & TransportersSuppliers & Transporters 220220

Worldwide ReinsuranceWorldwide ReinsuranceOperationsOperations

JapanJapan GermanyGermanyKoreaKorea U.K.U.K.ChinaChina FranceFranceTaiwanTaiwan SpainSpainMexicoMexico SwedenSwedenSouth AfricaSouth Africa Czech Republic Czech RepublicFinlandFinland Slovak RepublicSlovak Republic

Price-Anderson Price-Anderson Enacted In 1957 To:Enacted In 1957 To:

• Encourage The Private Development Of Encourage The Private Development Of Nuclear Power.Nuclear Power.

• Establish A Legal Framework For Potential Establish A Legal Framework For Potential Liability Claims.Liability Claims.

• Provide A Ready Source Of Funds To Provide A Ready Source Of Funds To Compensate Injured Victims Of A Nuclear Compensate Injured Victims Of A Nuclear Accident.Accident.

Nuclear Insurance Nuclear Insurance Pooling System Pooling System EstablishedEstablished

Initial capacity is $60 million. The federal portion of the indemnity was $500 million.

The Omnibus Definition of Insured is developed.

Three Fundamental Three Fundamental Concepts:Concepts:

• Definition of InsuredDefinition of Insured• Policy Period and LimitsPolicy Period and Limits• Defense Costs Within LimitsDefense Costs Within Limits

1967...

• The Price-Anderson Act Is Renewed.

• The Definition of Extraordinary Nuclear Occurrence “ENO” Is Added To The Act.

Insurance Pools waive most tort defenses in the case of an “ENO.”

Court Challenge to Court Challenge to Price-AndersonPrice-Anderson

Carolina Environmental Study GroupCarolina Environmental Study Groupet al v. Duke Power Companyet al v. Duke Power Company

U.S. Supreme Court rules in 1978 U.S. Supreme Court rules in 1978 that the Act, including the limit of that the Act, including the limit of liability is constitutional.liability is constitutional.

1973…

1977…1977…

• Price-Anderson again renewed.Price-Anderson again renewed.• Second layer of protection added.Second layer of protection added.• $5 million per operating reactor.$5 million per operating reactor.• Federal layer of protection out Federal layer of protection out

when The 80th reactor is when The 80th reactor is licensed.licensed.

1988...1988...

Price-Anderson renewed For 15 Price-Anderson renewed For 15 yearsyears

Definition of public liability Definition of public liability expanded to include some costs expanded to include some costs of evacuationof evacuation

ANI Develops Liability Coverage “D”

Liability Coverage “D”Liability Coverage “D”

Reasonable Reasonable additionaladditional costs for costs for• FoodFood• ShelterShelter• TransportationTransportation• Police ServicesPolice Services

For Time Evacuation Order Is In For Time Evacuation Order Is In Effect + 30 DaysEffect + 30 Days

Financial ProtectionFinancial Protection

Evolution of Limits...Evolution of Limits...

0

50

100

150

200

250

300

Millions($)

1957 1969 1974 1977 1988

ANI - History of Liability Limits

Lim it Increased To $300 Million Effective 01/01/03

Secondary Financial Secondary Financial ProtectionProtection

$140

$310

$110

0

250

500

750

1,000

Mill

ion

s o

f Do

llars

Secondary Financial Protection Program - August 1, 1977

GovernmentIndemnity

SFP

ANI

$300

$10,300

0

2,500

5,000

7,500

10,000

Milli

ons

of D

olla

rs

Secondary Financial Protection Program - November, 2003

GovernmentIndemnity

SFP

ANI

ANI Response To The ANI Response To The Three Mile Island Three Mile Island AccidentAccident

TMI - The first two TMI - The first two days...days... March 28, 1979March 28, 1979

• 0400 Accident 0400 Accident OccursOccurs

• 0730 ANI0730 ANI NotifiedNotified

March 29, 1979March 29, 1979• ANI Personnel Arrive ANI Personnel Arrive

In PennsylvaniaIn Pennsylvania• Local Claims Office Local Claims Office

AuthorizedAuthorized• 51 Claims Adjusters 51 Claims Adjusters

Recruited From Recruited From Member CompaniesMember Companies

TMI - The Evacuation TMI - The Evacuation AdvisoryAdvisory

March 30, 1979 March 30, 1979 • Pennsylvania Pennsylvania

Governor Richard Governor Richard Thornburgh Thornburgh Issues An Issues An Advisory Advisory Evacuation NoticeEvacuation Notice

TMI - Opening of the TMI - Opening of the Claim OfficeClaim Office

• ANI’s claim office ANI’s claim office is open for is open for business within business within 20 hours of the 20 hours of the Advisory Advisory Evacuation Evacuation Notice.Notice.

TMI - ANI ResponseTMI - ANI Response

• ANI alerts media (television, radio ANI alerts media (television, radio and newspapers) of the location of and newspapers) of the location of the claims office.the claims office.

• More than $2 million in evacuation More than $2 million in evacuation claims will be paid.claims will be paid.

• More than $70 million in claims and More than $70 million in claims and legal expenses are paid.legal expenses are paid.

Terrorism CoverageTerrorism Coverage

ANI Covers Terrorism Losses Subject ANI Covers Terrorism Losses Subject To The Terms And Conditions Of Our To The Terms And Conditions Of Our Policies And Certified By The Policies And Certified By The Terrorism Terrorism Risk Insurance Act Of 2002 Risk Insurance Act Of 2002 (TRIA).(TRIA).

An Industry Aggregate Limit Applies To An Industry Aggregate Limit Applies To Losses From Terrorism Not “Certified” Losses From Terrorism Not “Certified” By TRIA.By TRIA.