15-th Anniversary of the Nuclear Insurance in Russia. Results and Perspectives.

• What historical background accompanied the creation of the Russian Nuclear Insurance Pool? What are the main stages of the Pool development?

Let us for a moment call to memory the year 1997. The market offered an enormous number of insurers – more than three thousand companies before the crisis. About six hundred insurance companies emerged and submerged within a year. The Russian insurance was terribly far from calling it “civilized market”, especially taking into account the extremely low loyalty of insurants with regard to insurers’ services, and the fact of using the insurance for redistribution or withdrawal of finance rather than for redistribution of risks. In such conditions, the creation of the first insurance pool in  Russia (let me note that up to now the Russian Nuclear Insurance Pool (RNIP) has been the most serviceable pool at the insurance market in our country) to deal with the insurance against risks in the most closed market segment was a real breakthrough effort. The Pool history covers several stages, namely: grouping of the nuclear insurance market, entering the international market with distribution of the Russian nuclear risks, the Russian pool integration into the international reinsurance system.

• What is the Pool’s today role in the innovation-driven economy, in maintenance and development of the Russian nuclear industry, in ensuring its competitive ability at the global markets?

Nowadays, the RNIP formed an integral part of the risk management system in the nuclear industry of our country. The insurance program is upgraded to comply with the requirements of a customer, the engineering monitoring of nuclear facilities in our country is performed on a regular basis, a number of insurance types to be purchased by the industry sector grows, joint exercises are carried out to drill response actions, that the parties shall take in case of nuclear incident. The RNIP has become a substantial element of the global nuclear insurance. Unfortunately, our capabilities now are suppressed by low-level ratings of the Russian insurers, which in their turn are constrained by the country rating.

• How much veracious do you find the statement that the level of the world community confidence in the Russian  nuclear power industry as well as the level of reliance on safe operation of our nuclear plants increased significantly due to creation of the Pool and its activity?

The following principal conditions were stipulated for distribution of the Russian nuclear risks abroad: creation of the Russian pool, conducting of the international audit, inspections of the Russian nuclear facilities. There was created a pool, which existed to collect best practice of domestic insurance and distribution of risks among the Russian companies which were the Pool members. Later on, the industry sector itself realized, that there was a necessity in higher limits, and for this purpose the international reinsurance was essential, which, in its turn, requires performance of international inspections. Thus, nearly 10 years later, upon creation of the RNIP the risks of the Russian NPPs started to be distributed not only among the Pool members, but also at the international market. International inspections highly appreciated the quality of our NPPs, high level of qualification of staff specialists, the quality of NPP management and maintenance. The Russian nuclear risks are distributed at the international market alongside with the European, American, etc. risks. Nowadays, the risks of Rosenergoatom are reinsured in 16 foreign nuclear insurance pools. In case of a nuclear incident at these facilities, the maximum amount of insurance settlement payment for the RNIP will make RUB 21 billion.

• What activities of the international pooling system does the RNIP take part in? What is their significance for recognition of Russia as an equal partner in the field of protection against nuclear risks?

The RNIP is a member of the international pooling system, which combines all nuclear insurance pools of the world, and takes part in all international activities of the latter. We have close co-operation and maintain partnership relations with the national pools. The RNIP both distributes the Russian risks at the international market and takes active part in reinsurance of the international risks increasing the number of pool-partners year by year. In 2012 we shared reinsurance of nuclear risks of 12 countries. The maximum reinsurance capacity that the RNIP offers for insurance of foreign nuclear facilities equals to USD 50 million. Starting from the year 2012 not only the conventional risk of civil liability, but also the complete program for insurance of the Russian NPPs’ property are distributed by us at the international market.

• How does the Pool’s activity contribute to increase confidence level and authority of the Russian insurance industry at the well-developed insurance markets? Why is the Pool the sole company today, which gets to reinsure risks from European, American and Asian markets on a regular basis and in significant amounts?

This industry sector exists to the utmost transparently. This is necessary for insurance purposes, and this is critically important for the purposes of international reinsurance. It is evident that not any market will ever take to insure the risk, which is not utterly clear and which lacks provision of complete and exhaustive information. There is a schedule for international inspections in our country, and our engineers are also involved in inspections of NPPs located in other countries. In 2012 one our inspector took part in three international insurance inspections at facilities, which were reinsured by the RNIP. There is a constant information exchange among the national pool and international pools. Insurants are totally ready to carry on a policy of openness and implement the comprehensive insurance program in sequential manner.

• What makes the Pool’s members to provide high level of mutual confidence and openness? How does the mutual exchange of confidential financial and reporting information contribute to achieve high level of trustability and undoubted paying capacity of the Pool’s members?

Let me note that the number of members of the RNIP does not increase with the increase of years, on the contrary it decreases. Now the RNIP has rigid selection criteria which were mastered year by year. This is due to the solidary liability shared by the members of the RNIP, as well as due to high-level requirements stipulated for the financial status of the Pool’s members. The RNIP developed a procedure which was later on taken as the basis for the procedure of the National Union of Liability Insurers applied to calculate shares of participation and the pool’s capacity. Mutual confidence is determined by collegiateness in taking decisions and by 15 years of full-scale functioning of the RNIP.

• What are the benefits that the insurers take from their working for the RNIP? To your opinion, what is the ratio of economic and reputational benefits?

Up to the moment of creation of the Russian Anti-Terrorism Insurance Pool in December 2001 the RNIP represented the sole example of a full rate consolidation of the insurance industry for protection of client’s interests. And even now there are only two such examples at the market, I mean the RNIP and the Russian Anti-Terrorism Insurance Pool. Of course, there are other examples, such as the Russian Insurance Community, and the National Union of Liability Insurers, but the level of consolidation in these companies is determined by the requirements of compulsory insurance laws. The activity of the RNIP does not contain any compulsory types of insurance. But it contains consolidation.

• What is the role of the state in safety of nuclear facilities? Is it possible to create a mechanism of issuing the state guarantees in insurance of nuclear risks in Russia? Why does our legislation make it impossible to apply the western model, where the state acts as a reinsurer of the youngest hand with regard to the irretrievable risk?

The state’s role is considered to be defining. If the state had no position with regard to insurance of nuclear risks no pool would exist, or its existence would be formal, i.e. “on paper”. The insurance industry cannot ensure safety of the nuclear industry. This can be done by the state only, provided that there is sequential policy aimed at construction of new NPPs and regular upgrading of safety level at the existing and newly built NPPs. The RNIP is an insurance institute, a tool for redistribution of risks. It is designated to render assistance to the state in case of a nuclear incident. And I disagree with the statement, that the state in the Russian Federation is not the final reinsurer in case of a nuclear incident. Liability of the RNIP’s members is limited to a specified sum. The insurance contract is concluded based on the amount of this sum, but the liability above this sum is incurred by the state.

• What corrective amendments were introduced into the system of protection against nuclear risks as well as into insurance (reinsurance) conditions after the events at the Fukushima NPP? How did this event influence the dynamics of the global and the Russian insurance and reinsurance markets?

The causes and consequences of the events at the Fukushima NPP (Japan) were analyzed in the whole world and in Russia. The comprehensive analysis has been carried out to assess probability of occurrence of such events at the Russian NPPs. All errors in the design and safety systems that appeared to be in Japan have been taken into account. According to the conclusion made by the specialists, the occurrence of similar to Fukushima events at the Russian NPPs is improbable.