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Most of UK Didcot loss contained by German market

The majority of any loss from a major fire at the Didcot B power plant in Oxfordshire last night (19 October) will be borne by the German insurance market, according to sources.

The plant is owned by German utilities company RWE, which buys the lion's share of its cover in the domestic market.

"Very little of the cover gets into London. The main placement is done in Germany," one source said.

Some of the relevant insurance cover is also said to be placed with other continental insurance companies, although some facultative protections could be triggered in London. The insurance is purchased via a captive insurance company.

Sources said that given that the fire damaged a cooling tower rather than the parts of the plant that generate electricity, the loss could be relatively modest.

One underwriter said that he thought it would not exceed $50mn, with another estimating a loss of less than $100mn. No concrete information has yet filtered through to the power market.

A fire broke out at the Oxfordshire gas-fired power plant at around 8pm local time on Sunday, spreading to four cooling towers.

More than a dozen fire engines were tackling the blaze at one point. A 700 megawatt unit at the plant - which contributes just over half of total capacity - has been closed down.

RWE said in a statement that the cause of the fire has not been ascertained and added that it does not know when the closed unit will be reactivated.

Earlier this year, the UK Ironbridge Power Station biomass plant suffered a mechanical failure that looks set to cost insurers $230mn - primarily due to business interruption costs.

Other major recent power losses include a $149mn claim from a Bangladeshi power plant in April; a $75mn loss from a mechanical failure at an Algerian glass plant, also in April; and a $66mn hit from a fire at another UK plant in August.

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