Are businesses aware of the environmental liabilities they could face?

In today’s world, it’s not just oil and gas firms that face environmental risks – more companies than ever are exposed to potential liabilities. But among businesses, the level of understanding when it comes to environmental risks is as varied as the risk profiles themselves, according to one expert.

“Big oil companies, chemical companies, power generation, waste, those type of people, environmental risk to them is top right-hand corner – they understand it, they know it, and they know there’s a potential impact,” Cliff Warman, Marsh’s environmental practice leader, told Insurance Business.

While those firms may or may not purchase insurance policies, depending on how they choose to handle their risks, they will all have risk mitigation plans “left right and centre,” Warman explained, adding: “It’s an incredibly well-managed thing.”

At the other end of the scale, there may be far less awareness. For example, when it comes to property owners, who may often have large portfolios of land, environmental liability is “on the risk register, but it’s certainly not their right-hand top corner risk,” according to Warman. “Shell, BP – the big oil companies – will understand this stuff intrinsically, and they’ll have massive teams of people managing it, and people like property owners may not understand it at all.”

Because of this variation in understanding, the buying criteria is therefore very different across the profile of the clients – “they want insurance for different reasons,” Warman commented.

Despite this, the EL market has been growing and is competitive.

“When I started in London we had four and a half markets writing [environmental liability] and they were the big ones,” he explained, “and we’ve gone from that position to having at least 16. In the States, they’ve got around 35.”

One of the reasons that lots of people are interested in the market is because the claims have historically been quite low, he continued.

“It’s a truly global market, and it’s very competitive.”

You can hear more from Cliff Warman and a host of other leading industry figures at the Environmental Liability and Risk Masterclass 2017 at the Grange City Hotel, London, on June 29. The event will include presentations and panel discussions on a range of topics from names including the likes of Chubb, Willis Towers Watson, Marsh, Arthur J Gallagher and more.


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