Insuring nuclear accidents

In 1986, there was a disaster at the Chernobyl Nuclear Power Plant resulting in the largest peacetime release of radioactivity. Twenty-five years later, there are still limits on food production across Europe including the UK. Indeed, wherever the prevailing winds deposited the fallout, the use of agricultural land and certain animals for food is tightly controlled. The European Commission will not ease any of these limits in the immediate future. So, for example, sheep farmed in affected parts of the UK, thousands of miles away from Chernobyl, still cannot enter the human food chain. There's clear evidence of serious health problems in the communities living around the plant itself and in the adjoining countries, although there has been a serious lack of commitment to establishing the real extent of the problems. Now we have the damage to the Fukushima Nuclear Power Plant in Japan which, on the international scale, is now rated as serious as Chernobyl. It has been interesting to watch the buying patterns of people living on the Pacific seaboard with spikes in medications to reduce the effect of radiation. All this follows on our own problems at Three Mile Island, albeit that the release of radiation was minimal. So, the question we need to consider is what would happen if there was a major disaster close to a large US city?

Let's start with the broader social consequences. The Price-Anderson Nuclear Industries Indemnity Act of 1957 deals with the issue of liability, creating a no-fault insurance funded by the nuclear industry up to $12.6 billion. If the costs were greater, the Federal Government would pay the rest. This fund was not tapped following the Three Mile Island accident. All claims amounting to $150 million were paid by the standard insurance policies. But none of this mandated insurance covers the cost of the medical treatment for anyone injured or affected by radiation.

If there was an accident, the first line of response falls on the local hospitals and there's no suggestion they would fail to give care to those affected by radiation. Whether this would be covered by the existing health plans is highly debatable. Many of the standard exemption clauses exclude nuclear accidents because the costs are difficult to quantify and may be long-term. It would therefore fall to both the state and federal governments to decide what should be done. There could be formal legislation requiring the private insurance industry to cover the cost of treatment. The insurers would then have the right to recover these costs from the company owning the damaged plant. This would depend on being able to prove negligence and, no doubt, there would be a long delay.

So the expectation is that state and federal governments would create a special fund to cover all the individual and group health insurance costs. This might divert money from the Price-Anderson fund, or represent tax payers' dollars. However the states find this money, it would cover both the short and long-term costs of treatment. The problem is no one can even begin to estimate what those costs might be if several hundred thousand people require long-term care. What is clear is that most individual and group health insurance policies would not cover these costs.