Saturday, March 12, 2011

Who’s insuring this?

A photo on the New York Times website this morning:
Here’s the lede:
TOKYO — An explosion at a crippled nuclear power plant in northern Japan on Saturday blew the roof off one building and caused a radiation leak of unspecified proportions, escalating the emergency confronting Japan’s government a day after an earthquake and tsunami devastated parts of the country’s northeastern coast. 
An explosion occurred at the Daiichi nuclear power plant in northern Japan after the earthquake. More Photos » 
Japanese television showed a cloud of white-gray smoke from the explosion billowing up from a stricken reactor at the Fukushima Daiichi Nuclear Power Station Saturday afternoon, and officials said leaks of radiation from the plant prompted them to expand the evacuation area around the facility to a 12-mile radius. 
Government officials said that the explosion, caused by a build-up of pressure in the reactor after the cooling system failed, destroyed the concrete structure surrounding the reactor but did not collapse the critical steel container inside. They said that raised the chances that they could prevent the release of large amounts of radioactive material and could avoid a core meltdown at the plant. [emphasis added]
It could have been worse! It may well get worse.

The post title is to encourage you to think of who would insure your losses if such a thing happened in a neighborhood near you. Your homeowner’s insurance carrier? Nope. Nuclear hazards are excluded.

I don’t have the link at the moment, but as a matter of federal law, a nuclear plant must carry ten billion dollars in liability insurance. Sounds like a lot.

(Update: The liability insurance carried by nuclear plants is a mutual insurance company owned by the plants themselves; no commercial insurer will touch nuclear plants. I mentioned that in an earlier post but need to make that explicit here.)

Until you try to think of what the value of all the real estate in, say, the Twin Cities metro is.
In theory, the federal government is the “excess” carrier for losses above the ten billion. If you think the Social Security and Medicare are political footballs, imagine what dealing with nuclear disaster liability would be like. Meanwhile, you still have to make the payments on the hacienda that you can’t inhabit for 200 years.

The probability that Minnesota state Senator Julie Rosen and the rest of the eager beavers in the Republican caucus will bring (or brought) up this angle in hearings is pretty small. But the nuclear hazard represents a monumental socialization of a private business’ risk.

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