Willis Group Holdings plc, the global insurance broker, has developed a new insurance product to cover business interruption costs for companies with key locations, suppliers or customers situated in the vicinity of a nuclear power station, should they be forced to suspend operations in the event the plant’s safety is compromised and an exclusion zone is implemented to contain the damage.
The cover was developed by Willis Global Markets International (GMI), a division of Willis Limited, as a response to the earthquake and tsunami that struck Japan in March and triggered a meltdown at the Fukushima nuclear power plant. The consequent radiation leak saw the government impose a 20 kilometre exclusion zone around the plant. Manufacturers and other businesses within this zone were forced to close, regardless of whether they had suffered any damage.
Businesses may be affected if their own premises, or those of a key supplier or customer, are located inside a nuclear exclusion zone. They are likely to find that their conventional insurance policies will not cover the impact on their business, because traditional Property Damage and Business Interruption policies usually contain a Radioactive Contamination Exclusion Clause, which excludes any damage, denial of access or other consequences arising from nuclear radiation or contamination.
The Willis product is designed to respond not only when a nuclear exclusion zone is imposed following an earthquake or other natural catastrophe, but also when the exclusion zone is the result of other events or failures at a nuclear plant.
Toby Wemyss, CEO of GMI, said, “The significant business interruption losses in the wake of the Japanese tragedy brought home the importance of protecting your balance sheet against the forced closure of your own premises, or those of your critical suppliers or customers. With over 440 commercial nuclear power reactors operating in 30 countries, exclusion zone risk is a very real threat to business around the world. We were reminded again of the potential for loss on 23 August, when the earthquake centred near Richmond, Virginia, prompted the declaration of an “unusual event” at seven US nuclear power plants, and we are proud to have found an insurance solution to help our clients mitigate this risk.”