May 28, 2021

INSURANCE FOR RUSSIAN FLOATING NPP WILL COVER PHYSICAL SECURITY RISKS BUT NOT CYBERATTACKS

On May 25, 2021, Rosenergoatom – Rosatom subsidiary operating Russian nuclear power plants – awarded a 228 million Rubles (USD 3.1 million) insurance contract for Russia's first floating nuclear power plant, Akademik Lomonosov. The contract was awarded to one of the biggest Russian insurance companies Sogaz and will run from June 2021 through May 2023. The insurance limit for an insured event could reach up to 14.999 billion Rubles (USD 200.6 million) and the total annual coverage will be 36.579 billion Rubles (USD 489.2 million).

The insurance will cover the floating NPP at its location in the port town of Pevek in Chukotka Autonomous Okrug in the Russian Arctic. It would not cover the NPP moved to another location unless the movement was agreed with the insurer in advance, or such a movement was necessary to prevent imminent physical damage to the plant.

The risks of terrorism, sabotage, and acts of piracy are insured for up to 1.5 billion Rubles (USD 20.6 million) per event.

The insurance contract specifically excludes cyberattacks or loss of data from the insured events. A cyberattack (cyber-act) is defined in the tender documentation as "unauthorized, malign or criminal action or a series of actions, regardless of their time and location, or their threat or mystification, which include access to, processing, use or exploitation of any computer system".

The contract also contains a clause obliging the Rosenergoatom to provide the insurer with updates about all major changes in circumstances that could increase the insured risk. In this case, the insurer can ask for amendments to the contract and an increased premium. Direct financial correlation between the risk and the insurance premium incentivizes the insured company to minimize the risks, including those related to nuclear security.

Additional details on the relevance of insurance for nuclear security are available in the May-June 2020 Issue of the Russian Nuclear Security Update: http://russiannuclearsecurity.com/may-june2020issue#rec207804722.
A detailed article on the importance of insurance procedures for nuclear security was published in the Fall 2017 Issue of the Russian Nuclear Security Update http://russiannuclearsecurity.com/january2019issue#rec96716174.

Source:
Procurement # 210427/0513/543. Right to Sign a Contract for Insurance of the Property of the Floating NPP. April 27, 2021.