What is an Insurance Pool

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Search “what is an insurance pool” online and the explanation you’ll get is that an insurance pool is a collective pool of assets from multiple insurance companies.

As an underwriter in the property/casualty market you won’t be surprised that pooling is a commonly utilized tactic for high-risk insurance management, such as floods, earthquakes and environmental coverages.

However, unless you are familiar with how insurance pools work specifically for the nuclear industry, you may not completely understand why as a licensed insurer you can consider joining the nuclear pooling system in Canada.

Governments created the appropriate regulatory policies with conventions to govern nuclear for the peaceful purpose of creating energy, and Insurers formed pools to meet the needs set out by these conventions. Financial security is the number one tenet of sound risk management, and you have this, when you have a number of reputable insurance companies coming together to insure nuclear reactors.

The number one job of an Operator following a nuclear incident is to get their operations working safely. The role of the pool of Insurers is to provide claims administration that is responsive and compensates the claimants affected; these two aspects offer the community resiliency and peace of mind.
NIAC Introduction:

The Nuclear industry does everything it can to ensure a loss never happens, but if it does there is a ‘mechanism’ in place in Canada to compensate claimants called the Nuclear Liability and Compensation Act. NIAC is approved to provide nuclear liability insurance required by this act, known as the NLCA. When primary and reinsurance companies join the Nuclear Insurance Association of Canada, commonly known as NIAC, we ask them to commit the amount of money they can afford to lose, we call it the ‘net’ amount. When there is more than one insurance company in the pool it helps to ‘spread’ the risk.

NIAC is highly specialized.

NIAC provides unique expertise in underwriting, risk control and claims administration on behalf of members of the pool. NIAC acts as if they are the nuclear insurance department for each member providing individual risk underwriting, policy issuance and governance, engineering services and claims handling. Like NIAC, there are pools in the U.K. and the U.S. and elsewhere; at present, there are 26 insurance pools around the world. Together, we can help to make sure there’s enough money to pay losses, should a loss occur.

The types of coverage that are available for nuclear include: liability, property, course of construction, machinery breakdown and business interruption.

NIAC only insures nuclear peril in Canada. We do not reinsure the risk of other nuclear pools; we are strictly a domestic pool. NIAC is unique in this as most pools do reinsure the risk of other pools. NIAC members are made up of property/casualty insurers, and reinsurers that are licensed under OSFI (The Office of the Superintendent of Financial Institutions, an independent agency of the Federal Government of Canada).

NIAC coinsures with NRI (Nuclear Risk Insurers), the British Pool from the UK, NRI does reinsure the risk of other pools. Together, NIAC and NRI can underwrite the full amount of liability that will be required by the NLCA (the Nuclear Liability and Compensation Act) that will increase to 1 $billion dollars.