Environmental regulation around the globe is a complex patchwork quilt of laws. For multinational corporations that demands a tailored insurance policy that adapts to the differing laws of the territories it operates in.
“From the multinational side, it’s incredibly important to make sure the policy is responding to local laws,” Glenn O'Halloran, UK & Ireland environmental risk manager at
Chubb, told Insurance Business. At last count, there were around 17,000 different pieces of environmental legislation globally, he explained.
“So when businesses do have an event, it’s important to have a local contact point within the certain territory where these losses occurred, and to ensure that the policy is structured appropriately for that territory.”
Regulation across different jurisdictions can be “wildly different,” Neil Beresford, partner at Clyde & Co, commented. Some markets, such as China and India as well as some countries in Europe, have compulsory insurance programs in certain areas, and it’s “no coincidence,” that those jurisdictions tend to see the highest claims activity, he said.
In the EU, the Environmental Liability Directive imposes liabilities for environmental damage on many companies operating within the bloc, requiring not only the prevention of damage but also restoration after an event. “About half the cases that we see are cases where a landowner has been required to remediate for something that someone else has done,” Beresford explained. “It’s the fact that the landowner is responsible for the acts of others that makes environmental risk of such general application.”
But despite the weight of the risks, clients typically don’t understand the extent of their environmental exposure, O’Halloran explained. Among those that do, there is a common misconception that coverage under property and general liability policies will be enough to cover the majority of any losses. Beresford added: “The market is in a very similar place to where D&O was say 15 years ago, or where cyber was five years ago, in that there’s not sufficient understanding of the generality of the risk.”
So with a complex landscape to navigate, how are clients – especially those facing exposures in multiple territories – best supported? O’Halloran stressed that both brokers and insurers must recognise that the differing requirements in different territories creates a need for local policies to be in place. “The common theme here is that a multinational client must properly structure their environmental insurance policy to respond to unique risks in each territory, and they must not rely upon a single master policy to appropriately insure their overseas exposure,” he said. Brokers should draw not only on multinational insurers’ knowledge of global environmental exposures, but also their capabilities in providing local services to clients, he added.
Don’t miss out on the chance to hear more from Glenn O’Halloran and a host of other leading industry figures at the
Environmental Liability and Risk Masterclass 2017 next 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 Chubb,
Aspen Insurance, Willis Towers Watson,
Marsh, and more.
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