In November, a consortium of 23 Japanese property and casualty insurers told Tokyo Electric Power Co. that it will not renew insurance expiring Jan. 15 on the utility’s Fukushima Daiichi nuclear plant, the Kyodo news service reported. Under the law, the government insures nuclear plants against accidents caused by natural disasters such as earthquakes and tsunami waves, and private-sector insurers cover other accidents.
Private-sector insurers are reluctant to renew coverage for the Fukushima plant as possible future accidents — for example during fuel rod extraction and other operations — are likely to become subject to private-sector insurance, the sources said, Kyodo reported. Utilities have two types of insurance covering accidents at nuclear power plants: policies with private companies and special compensation contracts with the government.
Cancellation of coverage presents a new problem for TEPCO since nuclear plants are required by law to be coverage by private-sector insurance. Without it, such future work as extracting nuclear fuel rods from the damaged reactors could be deemed illegal, Kyodo reported.
To avert that, Tokyo Electric Power Co. will deposit 120 billion yen ($1.6 billion) toJapan’s government as a guarantee against further accidents at the crippled Fukushima Dai-Ichi nuclear power plant as insurance at the facility lapses Jan. 15, Kyodo News reported.
After finding it difficult to extend an insurance contract to cover the crippled Fukushima Daiichi nuclear power plant, TEPCO has been forced to enter negotiations with whoever will sit down at the table with them, forcing them to look outside national borders for insurance, and now to creditor banks in hopes of obtaining loans. The negotiations could be fraught with difficulties, as the banks have told Tepco it must meet three preconditions for fresh loans: a capital injection from the government, a 10% increase in electricity rates, and the re-start of a nuclear plant next year, the officials said.
“Nationalizing Tepco doesn’t solve its problems. No matter who runs the company, it cannot maintain its operations without restarting nuclear reactors or raising electricity rates,” said Hirofumi Kawachi, a Tokyo-based analyst at Mizuho Investors Securities Co.