The relationship between environmental liability, regulation and insurance coverage has long been clouded by complexity and confusion.
The UK Environmental Regulator is increasingly focusing on enforcement as a means to adhere to regulations, according to Stephen Andrews, Head of Environmental, Europe,
Aspen Group.
As a result, the consequences of not observing environmental law – and good risk management – are becoming more critical and are ultimately a company’s responsibility.
“One element that drives the insurance market is the transparency of environmental claims,” Andrews told Insurance Business. “Environmental claims are often very secretive. People generally don’t talk about their environmental claim. There is a lack of information.
“But as industry and trade groups start to understand the costs associated with an environmental claim, the complexity of that claim and the time frame required in order to remediate the claim - that will continue to drive and shape the market going forward.”
One cause of this opacity is the lack of education around environmental liabilities and coverage.
“There is a huge gap in the traditional market in coverage compared to the products that the environmental market offers. The gap in cover and the need for the policy will continue to become clearer to a wider audience,” said Andrews.
The environmental insurance market is facing growing demand as environmental liability is better understood, added Andrews.
“I think products will address growing demand primarily by developing a more efficient delivery process,” he said. “You will have a more streamlined underwriting process, application process and I also think you will see the market drive towards portfolio solutions.
“For smaller companies, with lower premiums, the market should respond by looking at risks from a portfolio basis.”
He added that environmental insurance is also likely to become more intertwined with expert services. Insurance companies might soon be expected to provide services as part of the overall product. For example, Aspen has set up an environmental helpline across Europe for policyholders to contact experts directly at a time of crisis.
So, in a world where environmental regulation is increasing, the need for more transparency around claims and education is key.
Don’t miss out on the chance to hear more from Stephen Andrews and a host of other leading industry figures at the Environmental Liability and Risk Masterclass 2017 this Thursday at the Grange City Hotel, London. The event will include presentations and panel discussions on a range of topics from names including the likes of Aspen Insurance, Chubb, Willis Towers Watson, Marsh, and more.
Related stories:
Adopting a holistic approach to flood risk
Major global initiative Oasis HUB launches to tackle protection gap
