POLICY & FINANCE | INSURANCE & NUCLEAR DEVELOPMENT
Unique insurance considerations Given the complexity of the nuclear construction and operational landscape, multiple insurance considerations come into play. Builder’s risk insurance, for example, is instrumental during the construction phase, shielding against losses stemming from various unforeseen incidents, including fire, vandalism, or theft. As nuclear projects often involve significant investments and complex construction methods, traditional insurance policies may not adequately cover these intricacies. Therefore, engaging specialised construction all-risk insurance options that comprehensively address the unique risks involved is advantageous. This can include limits and terms unique to the nuclear construction environment. The intricate nature of nuclear construction frequently
necessitates collaboration with subcontractors who possess specialised skills. Subcontractor default insurance provides a safety net to manage risks associated with subcontractors failing to fulfill their obligations. By securing this insurance coverage, project stakeholders can ensure that potential disruptions caused by subcontractor issues will not compromise the overall project timeline or cost structure. Nuanced understanding of the differences in coverage between construction and operational phases is also paramount. Once a facility transitions from the construction phase to operational readiness, the associated risks shift dramatically. While construction-related risks may necessitate higher liability limits, operational risks include liability tied to nuclear incidents, worker safety, and supply chain disruptions. Adequately addressing these two distinct phases helps stakeholders ensure they meet and manage their insurance obligations while adhering to regulatory requirements. Cost overruns pose significant risks to nuclear energy
projects, with potential to destabilise project timelines and budgets in profound, if not staggering, ways. And while cost overrun insurance may not be currently available as a standalone product, at Willis we are continuing to explore new and alternative solutions with interested carriers to find ways to effectively consider and address these risks. In the meantime, stakeholders can and should adopt strategic risk management practices to mitigate against the threat. Locking in on early designs, ensuring adherence to project specifications, and adopting a solution-oriented culture among teams creates a conducive environment for managing costs effectively. A prevailing misconception in the nuclear energy sector
revolves around insurance being a mere accessory rather than an integral part of the process, and many stakeholders may perceive insurance costs as burdensome. Education on available specialised insurance options, especially for innovative designs like SMRs, can help counter these misconceptions. By fostering a clearer understanding of how insurance can alleviate financial barriers and support innovation, industry participants can enhance interest and investment in nuclear energy.
Enhancing risk management through early warning Deploying early warning systems that can identify potential risks ahead of critical project milestones equips nuclear project managers with necessary tools.
38 | April 2025 |
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By utilising advanced methodologies such as Predictive Project Analytics, stakeholders gain access to data-driven insights that assist in monitoring progress, assessing risk indicators, and implementing course corrections as needed. Fine-tuning risk assessments empowers organisations to proactively address inefficiencies and pivot as circumstances change. In addition, understanding subcontractor risks is
paramount for achieving project success. As nuclear construction often involves a multitude of specialised contractors, developing insurance strategies prioritising the evaluation of subcontractor performance is essential in mitigating risks related to project delays and failures. Together with robust contractual agreements defining expectations and responsibilities, these strategies help establish a fortress of reliability within nuclear energy projects. Implementing early-stage collaboration with contractors
is vital, as a unified approach to problem-solving fosters creative solutions that can prevent delays and avoid unnecessary expenses. Creating checks and balances for cost management can help maintain rigor in execution, identifying anomalies that might indicate potential overruns before they escalate. By forging partnerships fostering shared objectives, industry participants can pool insights, resources, and best practices. Engaging insurers in early project discussions allows for holistic approaches in assessing and managing risks, ensuring that insurance considerations align with construction and operational objectives. Cross-industry collaboration also opens doors for
innovation in risk management practices, leading to the development of unique insurance products tailored to the distinct risks associated with nuclear energy projects. By embracing collaboration, the nuclear sector can enhance resilience while propelling its mission toward meeting climate goals and promoting energy independence.
Understanding insurance As the nuclear energy sector stands poised to address climate challenges in an era of transformative change, the unique insurance landscape surrounding its construction necessitates careful consideration. The intersection of evolving political climates, regulatory frameworks, and market dynamics creates both challenges and opportunities for enhancing nuclear energy’s viability. By understanding how insurance mechanisms interact
with each phase of the nuclear energy development lifecycle, stakeholders can better navigate risks while fostering growth. A coordinated approach that integrates insurance considerations into project planning and execution can position the nuclear sector as a vital component of a balanced, safe, and secure energy future. As societies strive for sustainable energy solutions in the face of climate change and resource scarcity, nuclear energy remains an indispensable component of a solution wide enough to meet the demands of future generations. By recognising the unique insurance considerations intrinsic to nuclear energy construction, stakeholders can harness innovation, drive efficiency, and develop the resilience necessary to navigate the complexities of this critical field. ■
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