Global insurance specialist ACE is launching ACE Environmental Risk (AER) to reportedly help European organizations better manage their environmental liabilities and risks in the face of increasing EU regulation.
The European Union’s Environmental Liability Directive which came into force in April 2004 will create increased liabilities for organizations of all sizes. Member states have until April 30, 2007 to incorporate the Directive’s provisions into national law. It will also require business to meet increased levels of disclosure around their environmental exposures. Moreover, despite the drive for European harmonization, EU regulations may still vary from country to country so organizations operating across more than one country must ensure they are aware of any differences in legal requirements and liabilities.
ACE reportedly believes that there is a significant lack of awareness and understanding of the implications of the new Environmental Liability Directive and that, as a result, many companies are inadequately covered. The situation is reportedly exacerbated by the fact that the majority of environmental liabilities are attached to small and medium sized businesses, which are those least able to absorb the often catastrophic impact of an environmental problem.
Speaking at Monday’s Federation of European Risk Managers (FERMA) Congress in Lisbon, Portugal, Karl Russek, senior vice president of AER said: “The EU’s Environmental Liability Directive is a wake-up call for European companies. We plan to work in partnership to help them understand their liabilities and to limit their exposures.”
Pollution liability is a key aspect of environmental risk management with many European organizations currently under-insured, according to ACE. Exposures either due to on-going operations, or historic activities on property in previous years can have a significant impact. There is reportedly virtually no way to be certain of what took place on premises years ago, so any organization which owns or rents land is at risk. The increased pressure to act in an ethical and responsible manner and according to corporate governance guidelines is also an important consideration for shareholders and other stakeholders.
AER is building on the expertise it has gained through working successfully in the U.S., a country with established environmental liability legislation. ACE’s US market experience, combined with its extensive European presence and underwriting experience in the region, reportedly makes it ideally placed to help these organizations get to grips with their environmental exposures.
The business is headed up by Russek, who was senior vice president of AER in the U.S., who will take on a similar role in Europe operating from ACE European Group’s office in London.
Speaking at the launch of AER in Europe at the FERMA Congress in Lisbon, Russek said, “We are looking to build a balanced portfolio of business focused on long-term growth and profitability. We will achieve this through a defined underwriting process, to ensure that premiums are competitive, and by offering a full range of environmental liability insurance solutions designed with the needs of European organizations specifically in mind.”
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