Compulsory environmental liability plans should be scrapped

An EU-wide compulsory environmental liability insurance system would not benefit customers and so should not be introduced, according to Insurance Europe, the European insurance and reinsurance federation.

A recent survey conducted by the federation on the Environmental Liability Directive (ELD) revealed that many different insurance solutions are already available in EU member states to cope with market demand.

The survey also demonstrates that a voluntary free market in member states is already functioning in this challenging area, with different products and approaches available. An important conclusion drawn from the survey is that a “one-size-fits-all-approach” at EU level would not be feasible. On the contrary, such an approach could impede the current encouraging development of insurance products in the member states.

Nicolas Jeanmart, head of non-life, life and macro-economics at Insurance Europe, said: “Different markets demand their own specific policies and levels of cover, and insurers in individual member states are responding accordingly to those needs. The markets are at differing stages of development, but in general there continues to be positive developments in providing environmental liability insurance across the EU.”

The key findings of the survey included the fact that in most markets cover is available for all ELD risks (primary, complimentary and compensatory remediation measures); there is a diverse range of solutions, which reflects the various needs in different markets; and more than half of the countries surveyed offer products on a multi-national basis.

The survey also found that cover for ELD risks is provided either as part of general liability policies or as stand-alone environmental liability products that are provided by individual insurers or as environmental liability pools; the majority of ELD cover is between €1 million and €5 million, with uptake dependent on market demand; and available capacity for environmental liability in some markets is up to €50m, or can be even higher on request. It also noted that there are few reports of ELD insurance claims.