On 11 March, Yuan Linjiang, Chairman of the China Nuclear Insurance Pool (“CNIP”) and Chairman of China Re Group, published a signed article entitled “Taking history as a mirror, CNIP is given play to its functional value in guarding China’s nuclear energy undertakings secured for development” in China Banking and Insurance News. In the article, he reviewed the major setbacks of the Fukushima nuclear accident, analysed the dual-cycle pattern of CNIP that opens up domestic and international nuclear insurance markets with a foothold in the domestic nuclear power market, and drew up specific arrangements to ensure that the “14th Five-Year Plan” is properly implemented, the new stage of development is being guarded, and the “Two Centenaries” goals are achieved. The full text is as follows:
Taking history as a mirror
CNIP is given play to its functional value
in guarding China’s nuclear energy undertakings
secured for development
- Written on the 10th anniversary of the Fukushima nuclear accident
Yuan Linjiang, Chairman of CNIP and Chairman of China Re Group
On 22 September 2020, President Xi Jinping solemnly declared to the international community that China will adopt more powerful policies and measures to strive for the “30·60” target of peaking carbon dioxide emissions by 2030 and achieving carbon neutrality by 2060. This has put forward a revolutionary requirement for China to accelerate the construction of a clean and low-carbon energy system. Nuclear power is an important part of a clean, low-carbon, safe and efficient modern energy system. Accompanied by it is how to manage and avoid the risk of nuclear catastrophes. This is not only of high strategic value for the ultimate guarantee of achieving the goal of carbon neutrality, but also an important measure to help coordinate safety and development and build a safe country of a higher level.
As the only industrial platform for nuclear insurance risk management, CNIP has successfully served the Chinese nuclear industry for 22 years. This year coincides with the 10th anniversary of Japan’s Fukushima nuclear accident and the first year of the “14th Five-Year Plan”. We need to learn from history even more on the basis of the new stage of development, keeping traditions yet making innovations, making greater contributions for the national peak carbon emissions goal and the high-quality development of the nuclear industry.
Ⅰ.Ensuring the safety of nuclear power is related to national security and achieving the goal of carbon neutrality
1.The Fukushima nuclear accident is a major setback in the world’s clean energy development process.
On 11 March 2011, the Great East Japan Earthquake with a magnitude of 9.0 on the Richter scale triggered the Fukushima nuclear accident, the third major nuclear accident on par with the Three Mile Island accident in the United States and the Chernobyl accident in the former Soviet Union, which caused huge economic losses, people’s livelihood disasters and environmental damages.
On the one hand, it caused huge economic losses, people’s livelihood disasters and environmental damages. According to the estimates of Tokyo Electric Power Company (TEPCO), currently the funds required for the accident fund pool are equivalent to RMB1.3 trillion. In terms of compensation for third-party damage alone, as of February 2021, TEPCO has cumulatively paid compensation equivalent to more than RMB570 billion, and more than 1.8 million residents have been evacuated and sheltered.
On the other hand, the accident had once led to changes in the global clean energy development process and the confidence in nuclear power development, with countries such as Germany and Switzerland completely giving up nuclear power, and China slowing down the approval of nuclear power projects.
For this nuclear accident, although the post-accident handling work could be carried out relying on a relatively complete compensation system framework, at present, it is still far from that the handling of the accident is in order.
2.Strengthening nuclear risk protection is a key measure of promoting the development of nuclear power undertakings and an important guarantee for achieving the goal of carbon neutrality.
The Fukushima nuclear accident once again sounded the alarm for us. Nuclear insurance catastrophic risk management is extremely important, and good nuclear catastrophic risk management is the foundation of nuclear insurance. China’s nuclear industry has attracted worldwide attention on its developments, internationally ranking third in terms of installed nuclear power capacity and first in terms of the scale of nuclear power under construction, and running at the forefront of the world in terms of the application of advanced nuclear power technology. Nuclear insurance has a wide coverage and the coverage period can last up to a hundred years. Good nuclear risk protection is an important part of the insurance industry in serving the real economy and supporting green and low-carbon development.
3.The nuclear insurance pool system is an important component of the nuclear risk protection system.
As an influential and cohesive inter-industry cooperation organisation in the Chinese insurance market, CNIP actively integrates into the national nuclear risk management system in its operations, builds consensus, and promotes industry financing and cooperation.
Firstly, it not only brings together the insurance underwriting capabilities of 29 insurers, but it is also a mechanism-based cooperation platform that connects major nuclear power groups, insurance regulators, industry regulators, scientific research institutes and other institutions to form a joint force. On this platform, not only are there insurance business exchanges, but also technology, publicity, and branding.
Secondly, it provides emergency management and risk compensation, while focusing on prior risk prevention, technical support, and safety supervision so as to form an independent and professional risk supervisory body.
Thirdly, diversified cooperation is being carried out within the country, and effective risk dispersion is also achieved on a global scale together with nuclear insurance pool organisations in 26 countries and regions. Through CNIP, the insurance industry and the nuclear industry have formed a community of common destiny in which risks and interests are shared.
Ⅱ.CNIP lays a solid foundation for ushering the new stage of development
Since 2020, the central government has repeatedly put forward that it is necessary to promote the formation of a new development pattern with the domestic cycle as the mainstay and the domestic and international cycles boosting each other. CNIP has basically established a dual-cycle pattern that opens up the domestic and international nuclear insurance markets with a foothold in the domestic nuclear power market.
1.Serving the dominating domestic cycle pattern with a mature and reliable operation mechanism
CNIP, an insurance pool with the longest history and the most mature operation under the state of operation in China, has established a complete and scientific insurance operational and management system for nuclear catastrophes.
Firstly, it adheres to the building of a professional talent team and technology-driven leadership, and strives to construct three digital management platforms, such as emergency response, blockchain business management, and intelligent risk control, that incorporate the new concept of technology + insurance, thus forming a relatively complete and efficient system structure.
Secondly, it has formulated and implemented a joint liability system, net underwriting capacity system, solvency monitoring system and others to ensure the robustness of catastrophe insurance business. Thirdly, it has timely established a nuclear insurance emergency organisational structure and an emergency and compensation plan system to ensure the timeliness of catastrophic risk compensation.
Given an efficient and stable way of operation, CNIP has provided nuclear insurance coverage for nuclear power and nuclear industries and activities valued at close to RMB1 trillion and more than 20,000 high-tech personnel in China, ensuring full coverage of entities that are subject to domestic nuclear power risk.
2.Actively participating in the construction of a stable dual-cycle pattern adopting an eye-level perspective of the world
After years of development and accumulation, CNIP has now become an important pole of the global nuclear insurance system. In terms of underwriting capacity ranking that reflects one’s strength, CNIP ranks second in the world in underwriting capacity per dangerous unit for domestic and foreign businesses, and has been providing reinsurance support for about 350 nuclear power units and various nuclear fuel cycle facilities in 26 countries and regions abroad, thus the depth and breadth of the international business continues to increase. In terms of system construction that reflects one’s technology and development potential, CNIP’s multiple digital management platforms are pioneers in the world in the field of nuclear insurance, leading innovation in global nuclear insurance service.
In terms of global pricing power and influence, CNIP has steadily expanded its international influence through deep participation in the formulation of rules and the making of public decisions in the international nuclear insurance market, gradually forming its independent pricing power and say. CNIP has been able to “see the world at eye level” in the specialised fields. Vice Chairman Liang Tao mentioned at the CNIP 20th Anniversary Summit that: CNIP is a paradigm of the insurance industry for making concerted and united efforts, serving the development of the nuclear energy industry and supporting the real economy.
Guo Chengzhan, Deputy Director of the National Nuclear Safety Administration, also pointed out that nuclear insurance is the line of safety of nuclear undertakings which has supported the building of a community of common destiny for national nuclear safety. CNIP has the ability to protect the interests of the national nuclear industry and the national insurance industry, and promote a smooth and efficient dual-cycle structure.
3.Participating in the top-level design of the security system with overall planning of development and safety
Building a safe China of the higher level is a requirement for adhering to the overall national security concept. As a professional consortium in the insurance industry, CNIP, establishing a foothold in the management of nuclear risk catastrophes, provides advice and suggestions in terms of energy security, economic security, emergency management system improvement, and other aspects, including participating in research on nuclear-related legislation, research on the construction of mechanisms for the participation of commercial insurance in national nuclear accident emergency response, and research on the system of catastrophe liability reserves for nuclear insurance, providing professional services to relevant national institutions and government departments.
In 2020, the “Measures for the Administration of Catastrophe Liability Reserves of Nuclear Insurance” was officially promulgated. This is an important policy and measure for the insurance industry to implement the national nuclear safety concept, enhance the nuclear safety capabilities of insurance service, and regulate nuclear insurance operations.
Ⅲ.We actively serve to ensure the stable implementation of the 14th Five-Year Plan, guard the new stage of development and achieve the Two Centenary Goals
1.Agglomerating cross-industry performances to support China’s nuclear power development by giving full play to the platform role
The nuclear industry is a fundamental area for the country’s development. Premier Li Keqiang pointed out in the government report for 2021 that nuclear power should be actively developed in an orderly manner under the premise that safety is ensured. Through the platform of nuclear insurance pools, risk management concepts and resources of the insurance industry and the nuclear industry may be brought together to give play to domestic and foreign collaborations which will be more effective, jointly promoting the improvement of risk management in key areas.
Firstly, it is necessary to follow the national 14th Five-Year Plan as a guide in supporting the building of advanced nuclear power technologies such as floating reactors and small reactors independently developed by the country, tackling critical issues on key components and major technical equipment, providing guarantees for power generation loss, etc., continuing to do well in the development of insurance products for new type of reactors and new demands, thus giving play to the project supporting role of the financial industry in major national strategic tasks.
Secondly, it is necessary to gradually increase the global influence of China’s nuclear insurance to provide guarantee service and professional support for the Belt and Road nuclear power industry, helping the nuclear power and equipment manufacturing industry to “go global” in a smoother way.
2.Improving the capability of managing the entire chain of catastrophe risks with the emphasis on the protecting nature of nuclear catastrophe insurance
It has been emphasised in the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China that security development should run through all fields and the entire process of national development so as to build the national security barrier. CNIP must incorporate its own risk management into the overall national security framework in its considerations.
Firstly, it shall further advance risk protection to prevent risks before they happen. “Protection, rather than compensation, is the key.” CNIP shall give full play to its professional advantages in areas including supporting the legislation on the compensation for nuclear damage, the implementation of the liability insurance system for radioactive sources, and the improvement of the safety technology standard system, to assist relevant regulators to improve the overall effectiveness of safety management.
Secondly, the long-term nature and complexity of compensation for the Fukushima nuclear accident have once again demonstrated the urgency of accelerating China’s legislation on the compensation for nuclear damage, and CNIP will further help promoting the improvement of national legislation and regulations.
Thirdly, it shall continue to do well in the protection against nuclear catastrophic risks, implement the China Banking and Insurance Regulatory Commission’s system of catastrophic liability reserves for nuclear insurance, and organise members to accumulate reserves. It shall continue to promote the integration of the nuclear insurance emergency system with the national nuclear emergency system, firmly guarding the bottom line that no systemic risk should occur.
3.Building insurance pool benchmarks adhering to high-quality development
The operating experience of CNIP for more than 20 years has proved that insurance pools, as an important link in the special catastrophic risk management chain, play an increasingly important value in the national security system, reflecting the professional positioning of the insurance industry in “preventing risk and promoting development”, which is a cohesion and epitome of the financial industry solidly serving the real economy and supporting the construction of the overall national security concept. CNIP has provided a valuable and mature operation system and experience for the construction of insurance mechanisms in special risk areas.
In the face of “great changes unseen in a century”, risk factors from all parties emerge one after the other. China is accelerating the modernisation of the safety management system and the building of a high-level socialist market economy system. As an effective risk management mechanism, insurance pools may be replicated and promoted to more emerging risk support and protection fields, demonstrating greater efficiency of industry agglomeration. We have a huge responsibility on our shoulders and thus it is even more important for us to forge ahead.
In the new stage of development, CNIP will further put the new development concept into practice, serve the new development pattern, and promote the high-quality development of the nuclear insurance industry under the main theme of high-quality development leveraging the advantages of the insurance pool mechanism, guarding the realisation of the 14th Five-Year Plan and the Two Centenary Goals.