Insuring Against Catastrophe

Two years after Congress voted to open the field of nuclear fission to private enterprise, U.S. industry committed itself to spend more than $150 million on five atomic power plants. But not one private nuclear power plant is under construction. The big obstacle: lack of liability insurance.

Last week, before the Joint Congressional Committee on Atomic Energy, General Electric Co. Vice President Fran cis K. McCune said: "The gravest problem now facing the atomic energy business is that of liability for the consequences of an atomic incident. It is the business of private enterprise to take risks. It is, however, quite another thing to say that you will embark on a course which might affect the stability of your company or its very existence."

Last January insurance companies, spurred on by the AEC, formed three syndicates to deal with the problem. The first syndicate offered each company $50 million fire and property insurance on its own facilities. The second offered $50 million public liability coverage on each reactor. The third tendered a $16 million policy for either liability or property damage. Altogether, this was more than double the largest individual liability coverage ever written.

But it was not enough. Said an official AEC report: "This amount will not be deemed adequate by the atomic energy industry to cover the conceivable catastrophe." The insurance men themselves agreed. Last summer ten top insurance executives reported to the AEC: "The catastrophic potential, although remote, is more serious than anything now known in industry. [It] may be beyond the capacity of the insurance industry."

The insurance industry has no guides to go by, no actuarial tables of experience to show possible losses or reasonable premiums. Actually, the AEC has operated atomic reactors for a total of 700,000 hours without a serious accident. In a report to the Atomic Industrial Forum, a group of Columbia University experts also reassured businessmen that "a reactor is not a bomb." On the other hand, it cautioned that "the risk is such that the potential liability cannot be covered by private insurance alone."

In the face of such unknowns, only one U.S. company--Consolidated Edison--has so far announced its willingness to construct and operate a reactor without waiting for the insurance question to be settled. The rest were waiting last week for a solution.

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