Environmental risks reveal gaps in cover
Many companies believe their public liability insurance covers them against environmental risks only to discover that they do not, Valerie Fogleman of Lovells told delegates at the annual AIRMIC conference in Bournemouth today.
She said the problem is caused partly by legal changes and insurance companies taking a closer look at policy wordings due to the growing size and frequency of claims. Legislation that requires the remediation of land that is contaminated by past pollution incidents and water has substantially increased the potential liability of companies.
“More and more insurers are denying claims that they might previously have paid due to the larger amounts involved," she said.
Legislation has moved the goalposts so that much of the emphasis is on polluters paying for remedial work rather than pure compensation to affected third parties. This remedial work comes outside most insurance policies.
Mathew Hussey of Tysers told delegates: “During the past fifteen years gaps have appeared such that insureds face substantial risks for which they are not covered even though they are generally insurable. Risk managers need to study their wordings carefully and, where there are unacceptable gaps, fill them with the necessary protection.”
He described the many types of policies that are available for environmental risks, commenting that with claims expected to increase in the future, companies would be wise to purchase long term policies for sites that present a risk. In his view it is more likely that environmental policies in the future will become more restrictive in terms of both duration and cover.
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Note to editors: AIRMIC (The Association of Insurance and Risk Managers) represents risk managers in the UK, including 80% of FTSE 100 companies. Their annual conference in Bournemouth runs from June 13-14, www.airmic.com