General Insurance Corporation of India (GIC Re) has floated expression of interest (EoI) to engage professional institutions to work out solutions to issue nuclear safety bonds.
GIC Re has proposed to issue Nuclear Safety Bonds to garner part of insurance capacity required for proposed Indian Nuclear Insurance Pool, Minister of State for Finance Jayant Sinha said in a written reply in the Lok Sabha today.
"GIC Re has floated EoI to engage professional institutions to work out end to end solutions for issuance of Nuclear Safety Bonds," he said.
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Nuclear risks are of low frequency but of high severity nature, worldwide such risks are covered by pooling arrangements, he added.
While, nuclear risks or perils connected with hot zone properties and associated third party liabilities are not covered in conventional insurance policies, Sinha said.
"The proposed Indian Nuclear Insurance Pool is such a risk transfer mechanism. An in-principle approval has been received from Insurance Regulatory and Development Authority of India for the formation of the Indian Nuclear Insurance Pool (INIP)," the minister said.
The government had asked the General Insurance Company (GIC) to insure the atomic power reactors, but the public sector undertaking did not have the required monetary capacity.
But, wary of allowing the foreign insurance companies in the nuclear sector, the government then decided to come up with a nuclear insurance pool, where many companies can pool in the resources to insure the reactors.
