The global pursuit of clean, abundant energy has brought nuclear fusion from the realm of science fiction closer to commercial reality. As the prospect of operational nuclear fusion reactors in the 2030s looms, a compelling call is being made to insurers across the industry to actively back this transformative technology. This isn't merely about new business opportunities, it's about enabling a future energy source with profound implications for climate change, energy security, and economic stability.
Is fusion energy safer?
Nuclear fusion, the process that powers the sun and stars, involves fusing light atomic nuclei together to release immense amounts of energy. Unlike nuclear fission, which currently powers nuclear plants, fusion reactions do not produce any long-lived radioactive waste. The source relies on readily available fuels like deuterium, abundant in seawater, and tritium which future plants can produce themselves.
Crucially, fusion is considered an inherently safe method for power generation. If perurbation occurs, the fusion reaction simply stops, effectively turning itself off. This makes a meltdown scenario, as seen in fission reactors, practically impossible. Experts state that the safety profile of a fusion plant is similar to coal plants, rather than nuclear fission plants, a misconception which needs to be understood across the insurance market.
The development of fusion technology
Scientists in over 50 countries who have been researching nuclear fusion, have made significant breakthroughs recently, with the development of various machine designs that use powerful magnetic fields and lasers.
Bringing fusion energy to life depends on global teamwork and quickly developing new technologies. Institutes will also need to build the right support systems and ensure appropriate safety standards are in place. The ITER project in France, a large-scale international nuclear fusion research and engineering project which began assembly in 2020, will run its first experiments soon. The goal is to prove fusion works for electricity, aiming for full power by 2036. Many experts believe fusion power plants could be in operation by 2050, with private companies even pushing for earlier deployment.
UK and US governments leading the charge
UK and US Governments are making significant investments to accelerate fusion's development. The UK, for instance, is positioning nuclear fusion as a cornerstone of its industrial strategy, allocating over “£2.5 billion over 5 years to lead the global race for fusion energy, with the STEP [Spherical Tokamak for Energy Production] programme at its core…It aims to deliver a prototype fusion power plant by 2040 at West Burton, Nottinghamshire (Gov.UK: Fusion energy powers UK’s industrial strategy).
Similarly, the US is a major player in private-sector fusion investment, leading the way alongside China. Total private investment in global fusion development has increased considerably over the past year, demonstrating growing confidence in its commercial viability. Further US investment is projected to reach $1.5 billion, with the country actively fostering private sector involvement and commercialisation (Nuclear business platform: Top 3 fusion energy players).
What does this mean for insurers?
Despite the compelling advantages and significant investment, the insurance industry faces a unique challenge in underwriting nuclear fusion. The primary hurdle lies in deeply ingrained perceptions and outdated policy exclusions designed for nuclear fission. “Many developers who are now building pilot and demonstration sites, find themselves subject to policy exclusions that assume persistent decay heat, chain reactions and multi-year spent fuel storage. As a result of this, legacy nuclear-risk clauses drive up insurance premiums, forcing additional capital outlays during the costliest phases—construction and initial operation, especially for first-of-a-kind risks” (Fusion energy insights: Affirmative Insurance Coverage for Fusion, 3 key insights).
This blanket approach can lead to inflated premiums and contractual limitations, burdening pilot and demonstration projects with unnecessary capital outlays during the costly phases of development and initial deployment. The Lloyd's Market Association's 2023 revision (LMA5621), for example, retains broad restrictions on all nuclear activities, hindering insurers from providing tailored coverage for fusion's distinct risk profile.
As Tim Dodwell, Chief Executive at DigiLab, notes, "We have to accept that fusion is a game of extrapolation, as we scale it up to the size of the reactor that we want. This is much more an engineering risk” (Insurance Times: Insurers urged to back nuclear fusion as commercial viability nears).
The complexity of the technology maks determining precise scientific and operational risks, and therefore the appropriate cost of cover for initial constructions, a challenging exercise for insurers.
How can insurers respond?
The call for insurers to proactively engage with nuclear fusion is growing louder. They are being urged to move beyond fission-era exclusions and embrace affirmative insurance coverage that accurately prices fusion's unique risks. As detailed in Newfront’s (global insurance company) insights piece ‘Affirmative insurance coverage for fusion: 3 key insights’, this includes:
Eliminating blanket nuclear exclusions: Replacing meltdown-based triggers with data-driven modelling for partial-load plasma tests and other relevant fusion failure modes.
Incorporating lower radiological risk: Acknowledging the short half-lives of activated material and minimal risk of large-scale releases, unlike fission fuel rods.
Capturing ancillary industrial exposures: Addressing high-voltage systems, vacuum handling, thermal loops, and specialised tritium-processing lines under standard property and casualty policies.
Some major players are already stepping up. Chubb CEO, Evan Greenberg has described next-generation nuclear as an "opportunity hiding in plain sight...[pointing] to the benefits of carbon-neutral power generated by nuclear plants as demand for electricity grows amid an expansion of cloud computing and generative artificial intelligence” (E&E news: Chubb CEO on oil and gas), affirming a willingness to insure it. Munich Re have also expressed interest, “adapting coverage for advanced plants” (Fusion energy insights: Affirmative Insurance Coverage for Fusion, 3 key insights), if clear liability frameworks exist. Surplus lines markets in the US and Bermuda are also exploring first-of-a-kind solutions.
For brokers and MGAs, this presents a significant opportunity to be at the forefront of a new, potentially vast market. They will need to work closely with fusion developers and insurers to craft bespoke policies, educate clients on the distinct risk profiles of fusion, and navigate the evolving regulatory landscape. The UK government itself is actively "exploring ways to offer insurance for fusion energy plants at a competitive and fair price," indicating a recognition of insurance as a key enabler (Power Engineering: Fusion and Fission central to UK’s clean energy industrial strategy).
Nuclear fusion energy presents substantial opportunities for insurers, where they can unlock new underwriting avenues, contribute to clean energy, and position themselves at the heart of what could become the world's dominant power source. The future of energy, and with it, a significant new market for insurance, hinges on the development of this powerful new source.
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