European Insurance Federation Opposes Compulsory Environmental Liability

July 1, 2014

“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.

The federation consists of 34 members, representing Europe’s national insurance associations. It includes all types of insurance and reinsurance undertakings – pan-European companies, monoliners, mutuals and SMEs.

It recently conducted a survey on the Environmental Liability Directive (ELD), which it said revealed “that many different insurance solutions are already available in EU member states to cope with market demand.”

The survey also demonstrated 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, commented: “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.”

Insurance Europe listed the” key findings” of the survey as follows:
— 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.
— 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 [$1.37 million] and €5 million [$6.85 million], with uptake dependent on market demand.
— Available capacity for environmental liability in some markets is up to €50m, or can be even higher on request.
— Different risks are covered by different markets, with some risks, such as environmental damage, being more standard across EU member states, whereas others, such as business interruption, vary.
— Over half of the countries surveyed offer products on a multi-national basis.
— There are few reports of ELD insurance claims.

Insurance Europe is based in Brussels, and represents undertakings that account for around 95 percent of total European premium income. The bulletin noted that it “makes a major contribution to Europe’s economic growth and development. European insurers generate premium income of more than €1.1 trillion [$1.5 trillion], employ almost one million people and invest around €8.6 trillion [$11.776 trillion] in the economy.”

Source: Insurance Europe

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