Key Issues
Price-Anderson Act Provides Effective Nuclear Insurance at No Cost to the Public
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Current Coverage Exceeds $10 Billion
Congress passed the Price-Anderson legislation in 1957 as an amendment to the Atomic Energy Act. President Eisenhower signed the measure into law shortly thereafter. It requires nuclear power plants to show evidence of financial protection. Through this program, the nuclear energy industry provides a total of more than $10 billion in insurance coverage to compensate the public in the event of a nuclear accident. No portion is borne by taxpayers or the federal government.
This protection consists of two tiers. The primary level provides $300 million in liability insurance. This first-level coverage consists of the liability insurance provided by insurance pools. The pools are groups of insurance companies pledging assets that enable them to provide substantially higher coverage than an individual company could offer. If this amount is not sufficient to cover claims arising from an accident, secondary financial protection applies.
For this second level, each nuclear plant must pay a retrospective premium equal to its proportionate share of the excess loss, up to a maximum of $100.6 million per reactor per accident. This includes a $95.8 million premium and a 5 percent surcharge that may be applied, if needed, to legal costs. All 104 operating nuclear reactors are participating in the secondary financial protection program.
Updated and Expanded
The Price-Anderson Act originally limited liability for any single nuclear accident to $500 million in government funds, plus the maximum liability insurance available in the private market—at that time, $60 million—for $560 million total. Congress has extended the act several times, making significant alterations.
1967 Revision. Congress extended the Price-Anderson Act for 10 years in 1967. A new provision introduced the concept of “extraordinary nuclear occurrence,” which it defined as an accident that probably would cause substantial damage to citizens or property off the plant site because of radioactive contamination. The NRC is responsible for making such a determination.
The declaration waives most normal defenses to tort liability. Anyone who makes a claim need only show 1) bodily injury or property damage, 2) the amount of monetary loss and 3) that the injury to persons or property and resulting loss were caused by the release of radioactivity due to the accident. Essentially, this is a no-fault insurance program. To date, there has been no such declaration.
1975 Revision. Congress extended the act for another 10 years in 1975, the year it established the two-tiered system now in effect. First-level coverage consisted of the liability insurance provided by two private insurance pools—then $125 million. Second-level coverage now would mandate a $5 million maximum assessment per reactor for each major accident, with a maximum of two accidents per plant per year. The federal government agreed to make up any difference between the amount of protection provided by the first two levels and the $560 million limit.
Effective May 1, 1979, first-level coverage reached $160 million. Secondary coverage reached $400 million when the United States licensed its 80th commercial power reactor in 1982. Combined, the two levels totaled $560 million, reaching the threshold stipulated in the Price-Anderson Act at which the federal government would phase out its indemnity role.
Current Coverage Exceeds $10 Billion
Congress passed the Price-Anderson legislation in 1957 as an amendment to the Atomic Energy Act. President Eisenhower signed the measure into law shortly thereafter. It requires nuclear power plants to show evidence of financial protection. Through this program, the nuclear energy industry provides a total of more than $10 billion in insurance coverage to compensate the public in the event of a nuclear accident. No portion is borne by taxpayers or the federal government.
This protection consists of two tiers. The primary level provides $300 million in liability insurance. This first-level coverage consists of the liability insurance provided by insurance pools. The pools are groups of insurance companies pledging assets that enable them to provide substantially higher coverage than an individual company could offer. If this amount is not sufficient to cover claims arising from an accident, secondary financial protection applies.
For this second level, each nuclear plant must pay a retrospective premium equal to its proportionate share of the excess loss, up to a maximum of $100.6 million per reactor per accident. This includes a $95.8 million premium and a 5 percent surcharge that may be applied, if needed, to legal costs. All 104 operating nuclear reactors are participating in the secondary financial protection program.
Updated and Expanded
The Price-Anderson Act originally limited liability for any single nuclear accident to $500 million in government funds, plus the maximum liability insurance available in the private market—at that time, $60 million—for $560 million total. Congress has extended the act several times, making significant alterations.
1967 Revision. Congress extended the Price-Anderson Act for 10 years in 1967. A new provision introduced the concept of “extraordinary nuclear occurrence,” which it defined as an accident that probably would cause substantial damage to citizens or property off the plant site because of radioactive contamination. The NRC is responsible for making such a determination.
The declaration waives most normal defenses to tort liability. Anyone who makes a claim need only show 1) bodily injury or property damage, 2) the amount of monetary loss and 3) that the injury to persons or property and resulting loss were caused by the release of radioactivity due to the accident. Essentially, this is a no-fault insurance program. To date, there has been no such declaration.
1975 Revision. Congress extended the act for another 10 years in 1975, the year it established the two-tiered system now in effect. First-level coverage consisted of the liability insurance provided by two private insurance pools—then $125 million. Second-level coverage now would mandate a $5 million maximum assessment per reactor for each major accident, with a maximum of two accidents per plant per year. The federal government agreed to make up any difference between the amount of protection provided by the first two levels and the $560 million limit.
Effective May 1, 1979, first-level coverage reached $160 million. Secondary coverage reached $400 million when the United States licensed its 80th commercial power reactor in 1982. Combined, the two levels totaled $560 million, reaching the threshold stipulated in the Price-Anderson Act at which the federal government would phase out its indemnity role.
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