This article is published further to the Prospect Law seminar held at the Centre, Birchwood Park, Warrington, on Tuesday 30th April 2019.

Please click here to see the event flyer.

The seminar addressed gaps in the world of nuclear contracts, with afocus on insurance and the gaps to look out for in nuclear contracts and insurancearrangements, as well as the options available to minimise or remove thesegaps. This is the final of three sequentially linked papers that summarise theseminar’s content.

This paper will consider some of the more obscure gaps that can occur,some resulting from the radioactive contamination exclusion (RCE) clause foundon most non-life insurance policies, which was described in the first of these papers.

Insurance policies for nuclear contractors and operators

  • Normal liability insurance policies (for exampledirectors and officers, or products and professional indemnity policies)purchased by any business will contain an RCE clause. This will exclude any‘nuclear’ work.
  • Any contractors working on nuclear sites,especially if only occasionally or if nuclear consists of a small part of theirwork, will need to ensure that nuclear liability is properly allocated.

Claim investigation, defence, management and settlementcosts

  • The liability Conventions require operators tohave financial security to cover nuclear damage to third parties; these fundscannot be used to cover any costs incurred during or after a nuclear incidentthat causes damage. The Conventions are also silent on how these costs might beallocated.
  • Operators, transporters and contractors mustconsider these costs and their allocation; insurance is available to coverthem.

Counterparty Risk

  • The nuclear liability Conventions and nationallegislation leave nuclear site operators with long-term liabilities. Therefore,the solvency and durability of the financial security provider is an importantconsideration.
  • The prevalence of RCE clauses and nuclearinsurance complexities can increase counterparty risk.

Seminar KeyPoints

  • Insurance policyRCEs and interfaces can be the source of many coverage gaps.
  • Most of these and other gaps are avoidable ortransferable with analysis, though sometimes at a cost.
  • Scopes of warranties, polices and contracts shouldall be subject to experienced review, to help minimise any lack of cover.

About the Author

Mark Tetley has wide experience gained fromsenior positions across the London insurance market as both anunderwriter and a broker , in a variety of sectors. He provides adviceand assistance on a wide range of insurance and risk issues, includingcomprehensive nuclear liability and property insurance assistance, complexinfrastructure project programme design and review, claims and policy reviews,assistance with project insurance design and implementation in developingcountries, and many other aspects of risk mitigation.

Prospect Group is an award winning Multi-Disciplinary Practice combiningthe legal services of Prospect Law with the consultancy services of ProspectAdvisory. Our lawyers and technical experts provide a single point of referencefor clients involved in energy, infrastructure and other development projects.

This article remains the copyrightproperty of Prospect Law Ltd and Prospect Advisory Ltd and neither the articlenor any part of it may be published or copied without the prior writtenpermission of the directors of Prospect Law and Prospect Advisory.

This article is not intended toconstitute legal or other professional advice and it should not be relied on inany way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on [email protected]

  1. Insurance
  2. Nuclear

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