Require nuclear power plants to credibly be able to pay out damages equal to a Chernobyl-level accident. (We are fortunate to have had Chernobyl to know what that level is.)
In principle, this vastly simplifies regulation: the problem of preventing accidents becomes a internal (in contrast to an economic externality) issue between a plant operator and insurer.
Two theoretical problems: such accidents are so large that an insurer may run into the impossibility of hedging systematic risk: the entire world economy might be affected due to an accident. Adverse selection will encourage accidents that are worse than Chernobyl, mind-boggling.
There is also the practical problem of measuring damages and filing claims after an accident. Exactly where is the property line? Damage may persist for thousands if not millions of years.
The cost of the yet unsolved problem of safely and permanently disposing nuclear waste should be payable out of this money.
The motivation is that rising fossil fuel prices, perhaps induced by taxation, would make nuclear power more attractive. However, we would like to deploy it in an economically efficient way. Currently, the huge mess of regulation and NIMBY politics makes that highly unlikely, though it is unclear whether plants are now too easy or too difficult to build.
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