Should There Be A Nuclear War Risk Insurance?

With the growing concern and diplomatic tension of rogue states with nuclear capability, does the establishment of a nuclear war risk insurance now a commercially viable enterprise?


By: Ringo Bones


The Cold War may be a distant memory for most of us but the threat of Nuclear Armageddon has and is always been still at a moment’s notice – especially now with the tensions between North and South Korea are on an all time high due to the sinking of a South Korean warship under suspicious circumstances that resulted in the death of 46 South Korean sailors. Not to mention Iran’s clandestine nuclear weapons program that has raised serious concerns on every UN Security Council sessions. Add to that Taiwan’s desire to be fully independent from Beijing and loose nukes falling to the hands of extremist groups making it still a safe bet that the possibility of a nuclear war is still not zero. It really seems that the Doomsday Clock at the headquarters of the Bulletin of the Atomic Scientists is stuck at two minutes to midnight. Given that the threat of nuclear annihilation today is probably no more or no less of a possibility as it was at the height of the Cold War, does the establishment of nuclear war risk insurance still economically viable?

Ordinary war risk insurance came into being when the need for an affordable marine insurance arose during the threat of submarine warfare back in World War II. The US Congress then passed the War Risk Insurance Act, which provided insurance protection for cargo and crew ships supplying for the Allies. Since private underwriters at that time did not dare insure civilian ships engaged in commerce except at premiums far above those which could be paid. The War Shipping Administration – much to the relief of the private underwriters – offered premiums far below commercial rates which only the US government has the revenue to afford to take such risks at that time. Given that the legal precedents for establishing war risk insurance are already in place, is there one needed for the establishment for nuclear war risk insurance?

At least for mail in the United States that is, back in the early 1950s, the US Postal Service developed an emergency planning manual, outlining procedures that would still allow mail delivery following a nuclear attack. These plans were regularly updated and a complete revision was undertaken back in1981. In addition, Executive Order 11490, dated October 28, 1969, as amended by Executive Order 11921, dated June 11, 1976, assigned the post office responsibility for emergency mail service and other duties associated with civil defense programs of the time. Detailed instructions were also stockpiled, telling people how to fill up forms and account for any missing persons – and for postal officials, how to test cards for radioactivity before processing them.

Among the actions outlined in the 1981 revisions state the authorization of local postmasters to burn stamps to prevent them from falling into enemy hands. Restrict mail sent after a nuclear attack to first class letters and to place an immediate ban on the issuance of money orders for payment in the country that attacked the United States. At a 1982 congressional hearing, a post office official acknowledged that a massive nuclear attack would – at the very least – make implementing the agency’s plans very difficult. But he then defended them by saying that the agency must be prepared.

Given that today’s US Congress are currently embroiled in immigration and healthcare than in revising Executive Order 11490 and Executive Order 11921 in order for a better tailored emergency response against nuclear attacks from rogue states and extremist groups. Or better yet serve as a legal precedent for equitably structured nuclear war risk insurance. The establishment of a nuclear war risk insurance – as it seems – has become as dubious a concept as personal meteorite strike insurance - a catastrophic risk whose possibility of happening is exceedingly small from a statistical standpoint, reminiscent of the concept behind the Partitioned Multi-objective Risk Method developed by Yacov Haimes when it comes to the risk assessment rationale behind nuclear war risk insurance. Maybe insurance company brokers better consult their underwriters’ box and loss adjusters whether nuclear war risk insurance is a sound business model before their competitors beat them to an increasingly lucrative niche insurance market. It could be a very Dr. Strangeloveian way to make a profit.