Nikolaus von Bomhard, chief executive of Munich Re AG the world’s largest reinsurer, views insurance protection against the risk of nuclear incidents as unaffordable for insurers and power plant operators, according to a recent interview he gave in the German national Sunday newspaper Welt am Sonntag. To obtain a copy of the Welt am Sonntag article, click here.
Mr. von Bomhard told Welt am Sonntag that “[d]ue to the addition of potential damages, it wouldn’t be responsible if the insurance sector took wider-reaching risk-bearing” in the nuclear sector. He also stated that how much such a premium on nuclear risk would cost without the backing of state guarantees can’t be calculated with the current traditional models used to analyze this type of risk.
Mr. von Bomhard did say, however, that Munich Re’s balance sheet is prepared for events such as the recent catastrophe in Japan, and added that the costs from the Japan event should be tolerable for Munich Re, according to his interview.
“We’ve got the highest insurance density in the bay of Tokyo, where the intensity of the earthquake wasn’t nearly as high as further north,” Mr. von Bomhard is quoted as saying. In addition, Mr. von Bomhard stated that Munich Re reinsures nuclear risk only “to a very limited extent,” adding that, for instance, business interruption due to radiation isn’t covered by the policies.
Individual primary insurers, however, will probably have “substantial exposure” due to the series of major claims, Mr. von Bomhard told Welt am Sonntag.