BASIC FRAMEWORK OF NUCLEAR INSURANCE

The Atomic Energy Act of 1954 provided the legislative found- ation for the development of peaceful uses of atomic energy. In- dustry's newly acquired right to gain access to the government- owned nuclear material brought with it serious insurance problems. In 1955, as a first step toward seeking a solution to these prob- lems, the U. S. Atomic Energy Commission (AEC) appointed an Insur- ance Study Group of leading executives of property insurance (as distinguished from life insurance) companies in this country to study the feasibility of commercial nuclear insurance. The insur- ance executives concluded that the nuclear hazards were insurable, but that the demands for extraordinary limits of liability re- quired that the insurance be offered through nuclear insurance pools, rather than on an individual insurance company basis. There are two major categories of nuclear insurance, i.e. di- rect property damage and third party liability. In order to pro- vide direct physical damage insurance in the nuclear field, the stock insurance companies organized the Nuclear Energy Property Insurance Association (NEPIA), while the mutual companies organ- ized Mutual Atomic Energy Reinsurance Pool (MAERP). The NEPIA- MAERP contracts of insurance provide protection not only against the nuclear peril, but the non-nuclear as well (fire, extended coverage, boiler and machinery, etc.).