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The South African Nuclear Pools

The South African Nuclear Pools (SANP) has for years successfully facilitated the insurance of the Koeberg Nuclear Power Station, owned and operated by Eskom, on the local pool side and has managed to provide reciprocity to overseas pool members by arranging for local cover on their foreign risks.

Due to the unprecedented increase in regulatory requirements and the increase in awareness of the importance of subscribing to good ethics and corporate governance in business, the SANP has spent much time considering various alternatives to operating as an unincorporated loose association – its current legal definition.

Alternatives considered have included various forms of incorporation, the final decision being the incorporation of a proprietary limited service company to handle the administration of the pools.

The above structure serves to formalise the relationship between the capacity provider and the entity applying this acquired capacity to foreign risks.

This situation allowed for a thorough review of all the relevant documentation pertaining to the operations of the pools, which was planned for early 2009.

South African Nuclear Insurance - changes and future growth

The South African Nuclear Pools for the insurance of nuclear risks have for years handled the administration around the nuclear insurance arrangements of the Koeberg Nuclear Power Station and the resultant reciprocity agreements with nuclear pools from around the world.

Capacity has historically been provided by only a few committed members, the local pool effectively retaining between one and two percent of about 70% (pools portion) of total risk. Presently, the policy liability limit is US $ 2.4 billion.

The above administration is performed by SAIA, with a management contract between the pools and SAIA regulating the relationship. This structure has always resulted in effective and positive synergies for all the parties involved.

Process of change

In light of the state of the current global markets and with a view to enhancing risk management, governance and reviewing and updating the relevant documentation of the pools, the following has been decided upon:
  • To change the pools from being legally seen as an unincorporated loose association of persons – which really means very little if anything, to incorporating a company to handle the administration of the pools.
  • This company will apply to become a Lloyds Coverholder.
  • Shareholders will be members of the pools.
  • Directors will also be sourced from pool members.
  • The company will be run on a tax neutral basis.

It is true that the above will result in additional costs being incurred, however, the benefits of improving risk management and enhanced governance will far outweigh the costs.

Going forward

The immediate plan going forward, as agreed upon by members at the last Annual General Meeting that took place on 12 June 2009, is to attract more participants to the pools. Despite the current global market woes it is believed that there will be growth going forward – there are massive new build programs throughout the world and this augurs well for nuclear insurance business. South Africa will be well positioned to take advantage of the probable future growth in Nuclear Insurance flowing from the increased new build.

The Bigger Picture

The recent International Nuclear Pool Chairman’s Conference 2009 and Nuclear Pools’ Forum 2009 that took place in London between 22 and 25 June 2009, was well attended by pools from around the world.

Topics presented highlighted the nuclear renaissance with new build being planned and or commenced on almost all continents of the world.


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