DWF logo


DWF logo

          The impact of changes to the nuclear liability regime on the insurance sector

          Date: 30 January 2017

          Date: 30/01/2017

          Major changes are due to the nuclear liability regime in the UK meaning that in the event of a nuclear incident an increased amount of compensation will need to be made available to a wider category of claimants. 


          Major changes are due to the nuclear liability regime in the UK which is based on the Paris and Brussels conventions. The changes mean that in the event of a nuclear incident an increased amount of compensation will need to be made available to a wider category of claimants, for higher amounts and in relation to a broader range of damage than is currently the case. In addition the liability cap is due to be increased, geographical scope widened, limitation periods will be extended and determination of relevant jurisdiction will be altered.

          Currently, the nuclear liability regime in the UK provides that the operator of a nuclear installation is strictly liable for nuclear damage to third parties caused by radioactive emissions from those installations. The operator`s liability for personal injury and property damage for any one incident is capped at £140million and limited in time (ten years). Operators need to have insurance or other financial security in place to cover their potential liability. 

          The Paris and Brussels conventions were amended by protocol in 2004. Implementation of those changes occurs when simultaneous ratification of the amending protocol by all member state parties to the conventions takes place. That is expected in early 2017 although the UK has already provided the relevant statutory instrument intended to implement the 2004 amending protocol, which is known as the Nuclear Installations (Liability for Damage) Order 2016.

          Main changes

          • The introduction of three new categories of compensable damage.  Currently the regime only applies to personal injury and property damage.  The new regime will apply to the costs of measures of the impaired environment; loss of income derived from an economic interest in any use or enjoyment of the environment; the costs of preventative measures and further loss or damage to the environment caused by such measures.
          • An increase in the cap on operator liability - an increase for power plants and other standard sites from £140m to €1.2b Euros.
          • Wider geographical scope - to include non-Paris convention countries.
          • Extension of limitation period - from 10 to 30 years.
          • Changes to the insurance market. With the increased limitation period where insurance is not available from the market the government can provide insurance itself on commercial terms
          • New rules for nuclear substances. The Energy Secretary has the power to set lower liability amounts for installations where in the event of an incident there is unlikley to be significant damage
          • Jurisdiction and representative actions by a foreign state: the courts of only one country where a nuclear incident has occurred will deal with claims arising from that incident. Countries can also bring claims on behalf of persons.

          The impact

          It is clear that over the years, third party financial limits have not kept up with the development of the nuclear indusrty and the potential exposure of operators to pay for accidents. By way of example, the Chernobyl accident is estimated to have cost c. $80-$100 billion and the Fukushima accident around $40 billion. The reality of this is that such costs ultimately fall to governments and tax payers.

          Traditionally issues that have put off insurers providing higher amounts have focussed on the duration of liability (10 years, to go to 30 years) as well as the variation between different member states as to the financial amounts offered.

          A number of commentators are of the view that this is now an opportune moment for the insurance market to step up and offer greater market insurance involvement. They point to the fact that the capacity is available in the insurance market. They focus on the technical expertise developed by the insurance industry over a number of years which could be translated into an efficient claims handling sytem. Other ideas being mooted include looking at self-insurance, opening up the insurance market to a wider range of insurers than at present, a gradation of cover being provided, with the most serious cover being provided to the most important sites (in this respect there is scope to take advantage of the new rules for lower liability limits for relevant sites).

          It remains to be seen whether the insurance industry, with government support, will act accordingly. 

          We use cookies to give you the best user experience on our website. Please let us know if you accept our use of cookies.

          Learn More

          Your Privacy

          When you visit any web site, it may store or retrieve information on your browser, mostly in the form of cookies. We mainly use this information to ensure the site works as you expect it to, and to learn how we can improve the experience in the future. The information does not usually directly identify you, but it can give you a more personalised web experience.
          Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change permissions. However, blocking some types of cookies may prevent certain site functionality from working as expected

          Functional cookies


          These cookies let you use the website and are required for the website to function as expected.

          These cookies are required

          Tracking cookies

          Anonymous cookies that help us understand the performance of our website and how we can improve the website experience for our users. Some of these may be set by third parties we trust, such as Google Analytics.

          They may also be used to personalise your experience on our website by remembering your preferences and settings.

          Marketing cookies

          These cookies are used to improve and personalise your experience with our brands. We may use these cookies to show adverts for our products, or measure the performance of our adverts.