History

FOUNDATION AND DEVELOPMENT OF THE CZECH NUCLEAR INSURANCE POOL

First thoughts of founding the Czech Nuclear Insurance Pool go back to the year 1988. Actual discussions on commercial insurance of nuclear risks started in the year 1991, shortly after the Insurance Act has been passed and the monopoly of the only insurance company Česká státní pojišťovna (Czech State Insurance Company) has ended.

June 24, 1994 - The Czech Republic acceded to the Vienna Convention on Civil Liability for Nuclear Damage.

In the same year, the Czech Insurance Association had established a working group, which concluded scenario and schedule of foundation of the Czech Nuclear Pool.

Twelve Czech insurance companies joined insurance of nuclear risks during the year 1995.

July 20, 1995 - First Co-operation Agreement of Insurers Insuring Third Party Liability in Respect of Operation of Nuclear Installations was signed.

The Agreement had determined Leading Insurer - Česká pojišťovna a.s. - that established and conducts the Czech Nuclear Pool Office.

September 1, 1995 - The Office started its operation. This day is, in fact, considered as the date of foundation of the Czech Nuclear Pool.

June 26, 1996 - Co-operation Agreement of Insurers Insuring Material Damage on Nuclear Installations was signed.

In 1996, the activities of the Pool concentrated on active reinsurance. The British, the German and the Slovenian Nuclear Pools belong among foreign partners of the Czech Nuclear Pool in this first period.

July 1, 1997 - Statute and Rules of Procedure was signed.

October 1996 - The Czech Nuclear Pool concluded its first transport liability insurance contract.

January 28, 1998 - Dukovany NPP became the first power plant insured by the Czech Nuclear Pool.

January 1, 1999 - Agreement on Joint and Several Liability of insurers participating in the insurance of nuclear installations came into force.

April 1999 - The Czech Nuclear Pool hosted an international Nuclear Pool´s Forum – a meeting of delegates of national nuclear pools that took place at Žofín, Prague.

October 1, 2001 - Co-operation Agreement of Insurers Participating in Insurance of Nuclear Operation Facilities on Claims Handling came into force.

With effect from January 1, 2008 the official name - Czech Nuclear Pool is changed to Czech Nuclear Insurance Pool.

January 1, 2013 – The Co-operation Agreement of Insurers Participating in Insurance of Nuclear Operation Facilities on Loss Assessment was changed - all activities connected with claims handling process have been concentrated at the Leading Insurer.

March 23, 2013 – Board of the Czech Nuclear Insurance pool decided to establish the Standing Working Group for “Claims handling” and the Standing Working Group for “Engineering”.

October 7, 2013 - Board of the Czech Nuclear Insurance pool decided to establish the Standing Working Group for “Solvency ” entitled for assessing appropriateness of net retentions of pool members.

January 1, 2016 – Updated Statute and Rules of Procedure came into force - setting stricter rules for appropriateness of net retentions of pool members to compare with Solvency II.

History of founding and principles of nuclear pools` activities

First nuclear pools were founded in mid-fifties of the 20th Century. The process was tightly connected with the beginning of nuclear industry - strictly speaking with the beginning of private nuclear industry with peaceful utilisation of nuclear energy.

In insurance business the word "pool" is commonly understood as voluntary association of insurance companies providing capacity needed for insurance / reinsurance of a certain (usually non-standard) risk.

Reasons for establishing nuclear pools:

• Unknown and possibly catastrophic risk - unsuitable for insurance on individual basis;
• Small number of insured risks (less than 500 industrial nuclear reactors in the world today, while not all of these reactors are insured/reinsured) - Insurance portfolio is insufficient, unbalanced, not legitimising foundation of individual and specialized departments in insurance companies;
• Sums insured in respect of third party liability and material damage losses are of such an extent that a maximum support of the whole national insurance market is needed;
• The catastrophic nature of risks would expose individual insurers to unknown or undesirable accumulations, if usual reinsurance and retrocession contracts were used;
• The possibility of mutually advantageous exchange of reinsurance business among nuclear pools provides access to capacities of all participating national nuclear markets;
• Allowing participation of all insurers active on a national insurance market, which would be otherwise not able or willing to participate in this area of business for several financial, technical or personnel reasons.

Basic principles of nuclear pools` activities

• All risks accepted are covered by net retention of individual pool members (insurance capacity). The risks may not be further individually reinsured;
• Reinsurance is arranged among pools and is therefore transparent and maximally protected against unknown accumulation of risks;
• Reinsurance among pools is direct (without using any intermediaries), therefore the cost of reinsurance is minimal.