As the global energy transition accelerates and countries increasingly turn toward nuclear power to meet rising electricity demand, a troubling question is gaining urgency: who pays when nuclear systems fail? With the possibility of catastrophic events such as Fukushima or Chernobyl still shaping public perception, and with nuclear technologies expanding into healthcare, agriculture, and even defense applications, the financial system’s ability to absorb such shocks is coming under scrutiny.
In India, the answer is stark. According to current industry practice, no insurer provides coverage for nuclear exposure or nuclear-related incidents. Whether in personal health policies, commercial insurance, or institutional risk frameworks, nuclear risks are almost universally excluded. The reasoning is not only actuarial but structural: nuclear accidents are rarely isolated events. They tend to affect entire communities or regions, involve highly specialized industrial processes, and are governed by separate legal regimes that sit outside traditional insurance models.
At the center of India’s nuclear liability system is the Civil Liability for Nuclear Damage Act 2010, which established a framework in which nuclear risk is treated as a public liability rather than an insurable individual one. To operationalize this structure, the government created the Indian Nuclear Insurance Pool on 12 June 2015, a ₹1,500 crore collective mechanism formed by the General Insurance Corporation of India alongside 11 domestic non-life insurers. The pool was designed to provide limited coverage for liabilities arising from nuclear incidents while simultaneously enabling the expansion of nuclear energy infrastructure.
The system underwent a major legal transformation with the introduction of the SHANTI Act 2025, which replaced the earlier liability framework and restructured how responsibility is allocated between operators, suppliers, and the state. One of the most significant changes was the removal of the operator’s “right of recourse,” which previously allowed operators to recover compensation costs from equipment suppliers in certain circumstances. Under the new law, such recourse is only possible if explicitly written into contracts or in cases of proven wrongful intent.
This shift aligns India more closely with international norms, particularly the Convention on Supplementary Compensation for Nuclear Damage, which encourages standardized compensation mechanisms and cross-border cooperation in nuclear incidents. India is a signatory to this treaty, reflecting its intent to integrate domestic nuclear policy with global frameworks while expanding its civil nuclear ambitions.
Despite these legal refinements, the financial burden of nuclear risk ultimately remains heavily concentrated in the public sector. Operator liability is capped, and any damages exceeding insured or operator capacity are effectively absorbed by the Government of India. In addition, if insurance coverage is insufficient, state-backed compensation mechanisms step in, with claims handled through government-appointed authorities designed to ensure time-bound resolution.
This structure reflects a broader reality: nuclear risk is fundamentally uninsurable under conventional market conditions. In the event of a severe incident, private insurers would not be expected to provide coverage. Even in extreme scenarios, such as a nuclear weapon detonation within national borders, insurance contracts worldwide typically exclude war-related risks entirely, leaving such events outside the scope of private indemnity systems.
The implications extend into the healthcare and scientific sectors as well. Consider a hypothetical radiation leak at a nuclear facility affecting engineers, technicians, or researchers working on site. Standard health insurance policies do not cover nuclear exposure. While government frameworks or social safety nets may provide compensation in such cases, private insurers currently avoid underwriting these risks due to their scale, unpredictability, and systemic nature.
This gap highlights a broader tension in modern risk management. As nuclear technology becomes more integrated into civilian applications, from energy production to medical treatment and agricultural innovation, exposure to low-probability but high-impact events is increasing. Yet the financial instruments designed to manage risk have not evolved at the same pace, leaving a structural void between technological ambition and insurance capability.
Industry experts note that underwriting nuclear risk is constrained not only by potential severity but also by the lack of historical data. Unlike conventional industrial accidents, nuclear incidents are rare, difficult to model, and often involve cascading consequences that extend far beyond initial points of failure. This makes pricing risk or establishing reliable actuarial frameworks extremely challenging.
At the same time, India’s policy direction suggests an intent to expand its nuclear footprint. Recent regulatory changes have opened the sector further to private and foreign investment, including allowing up to 100% foreign direct investment in insurance and significant foreign participation in nuclear energy projects. These reforms are designed to attract capital and accelerate the development of safer, more efficient nuclear infrastructure.
However, the intersection of increased investment and persistent liability gaps raises complex questions. Investors, insurers, and policymakers will need to navigate a system where financial exposure is heavily concentrated at the state level, even as private participation grows. How risk is distributed in this evolving ecosystem will play a critical role in determining the sustainability of India’s nuclear expansion.
