Broking group Willis has developed an insurance product to cover business interruption (BI) costs for companies with key locations, suppliers or customers situated in the vicinity of a nuclear power station.
The cover incepts if the nearby plant’s safety is compromised and an exclusion zone is established to contain the damage, forcing the insured, its suppliers or customers to suspend operations.
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 resulting 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.
The 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.
“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,” said Willis GMI chief executive Toby Wemyss in a statement. “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.”