Insurance Gap Widens For Environmental Losses - cover is often incomplete or even non-existent without a dedicated environmental policy in place, according to the International Underwriting Association.

Insurance cover for environmental losses is often incomplete or even non-existent without a dedicated environmental policy in place, according to a research paper from the International Underwriting Association that examines potential environmental claims scenarios.

The report highlights the gaps in cover that exist when relying on standard public liability and property policies, or even public liability policies with regulatory clean up and contamination costs extensions.

It examines a range of potential loss scenarios that could affect different business sectors and result in incidents that are both costly and time consuming to handle.

“What is most striking about the scenarios is that it is easy to imagine a very wide range of businesses being involved in an environmental incident,” commented Chris Jones, IUA Director of Market Services. “Environmental liability is clearly not only the preserve of heavy industry.”

Among the scenarios it covers are dust problems on a construction site, failure of a hotel’s oil tank, a spill of pesticide during transportation and pollution of a car park from poorly maintained drains. All the scenarios are based on real life examples.

The key message of the report is that the gap between the range of environmental liabilities to which organisations are now exposed and the liability cover provided by traditional insurance policies has become uncomfortably wide and will get wider.

“It is important to remember that environmental liabilities are often difficult to manage,” added Mr Jones. They can take a long time to resolve and involve much technical input which, without an insurer’s help, may prove a considerable burden.

The IUA represents the company sector of the London insurance market.

Chris Jones, IUA Director of Market Services