With planning for nuclear facilities in the Gulf now underway, it is not too early for insurers to become involved.
According to Mahomed Akoob, managing director of Bahrain-based Hannover Retakaful, international insurers skilled in underwriting nuclear energy should be involved at the earliest stages.
“You need chemical and mechanical engineers and physicists skilled in underwriting these risks so there is informed capacity,” Akoob said.
“It would be a joint process involving international underwriters. This is essential in the planning phase so that there are no unexpected calls for safety features from underwriters later.”
The ultimate pricing and placement of the risk would also be a joint process, he said, between local and international nuclear underwriters, so that when it comes to placement of that risk, it is available in full.
“There is usually a very proactive approach in that regard,” he added.
Nuclear energy, as a low frequency/high severity business, will require participation of the international insurance markets.
“Whether it’s here or anywhere else you need an adequate pool to underwrite nuclear energy or any large energy risks,” Akoob said.
“You need a sufficient mass in order to underwrite it, to ensure that there is not an imbalance between premium and exposure. There would not be sufficient capacity in the GCC and in that way, energy risks are done on a worldwide basis. You need that critical mass.”
Akoob added that the inevitable involvement of the international market underlined the need for skilled underwriters to be involved at an early stage.
“Bearing in mind the size of the risk, the size of the risk might not be sustainable so in some cases around the world it would be impossible to place the insurance for the facility on the international market.
“So before the company has put up the price it has to be checked and assessed by the international market before it’s placed at all. Otherwise, it could be that you don’t have any one wanting to participate in that risk.”