Update on recent insurance for ELD...
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Update on recent insurance for ELD developments 13 th EC ELD national experts meeting European Commission, Brussels 10 June 2013 Carmen Bell Non-life Insurance Department Insurance Europe
Transcript of Update on recent insurance for ELD...
Update on recent insurance for ELD developments
13th EC ELD national experts meetingEuropean Commission, Brussels10 June 2013
Carmen BellNon-life Insurance DepartmentInsurance Europe
Overview of presentation
Agenda items
2
Insurance Europe
Risk assessment
Awareness
Types of liability products
Insurers’ experiences
12345
Conclusions6
Insurance Europe
3
Who?
What?
Why?
European insurance and reinsurance federation, founded in 1953
Represents around 95% of European insurance market by premium income
Committed to creation of favourable regulatory and supervisory framework for insurers at European and international level.
Insurance Europe - Members
34 national associations
26 EU member states
6 non-EU markets
Croatia, Switzerland, Iceland, Norway, Turkey, Liechtenstein
2 associate membersSerbia, San Marino
3 partnersRussia, Ukraine, Kosovo
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Risk assessment tools
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What do these tools identify?
Examples
Geographical location of potential risk of pollutionIndividual risks in protected areas, waterways, etc (eg DE)Different costs for remediation of damage
DE – GDV ZÜRSES – access to state ministry mechanism (MORA)FR – Assurpol “3-step process”UK – Larger members in London market with online toolsIndependent consultations?
Tend to focus on modelling environmental liability rather than the actual environmental damage.Do not always provide loss prevention or size of potential loss
Risk assessment tools
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Need for funding (difficult with economic downturn)
Need for access to data(lack of central database)
Need for consumer interest(lack on demand from clients/state)
Barriers can exist for further development of these tools
Awareness
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Source of problem?
Factors• ELD claims not declare• SMEs unaware of ELD risks
• SMEs unaware their cover does not include ELD risk
• Economic downturn
Lack of demand for ELD cover
Awareness
8
What is the insurance sector doing?
Increased awareness
EU level (Insurance
Europe)
National ins assoc
seminars (CZ)
Surveys and publications (ES, FR, UK)
Ongoingconsult with
govt (GR)Social media
(IT)
Awareness
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Insurance association and
company publications on
ELD risks
National govt
campaigns
EC conferences
and seminars
ELD awareness can be increased with continued cooperation
Types of liability products
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Stand-alone (EIL, EL, EL Damage)
Business activities
cover
Professional Indemnity
Property
GTPL endorsement
Various types of cover for environmental liability risks
Types of liability products
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Categories include:
Often excluded from cover
Industrial sitesContractors coverProfessionals coverTransport (road, rail, waterways)D&O cover
Willful acts and willful failure to comply with regulationsDamage caused by normal operations (ie foreseeable accidents)Gradual and accidental pollution (ie seepage of chemicals)GMOs previously excluded, though some start to cover
Types of liability products
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Non-binding model wording
Though not ELD, environmental risk cover sometimes also includes:
To offer guidance on designing cover for ELD (DE, CH)Special terms and conditions for some sectors
Business planning (eg architects)Transport
Insurers and brokers also design their own wording to suit special customer needs
Bodily injuryProperty damageBusiness interruption
Insurers’ experiences
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Need not just to execute claims, but
also close
Statistics skewed by focus on large
accidents
Penalties sometimes given instead of ELD
Pollution noted by government, but not
as ELD
Increased data on ELD cases requires cooperation
Insurers’ experiences
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Environmental risks not only about large pollution accidents
Future outlook
Small and frequent losses from road accidents (leak of contaminants into soil)Fuel tank spillsA more balanced portfolio (small and large risks) likely to result in more accurate risk dataNeed to factor in the risks of SMEs
Increasing experience for operators, insurers, brokersNo “official” data, but stricter safety standards are leading to increased awareness about potential ELD claimsSharing of information at national and EU levels leads to more understanding
Conclusions
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Increase the risk dataContinue cooperation at state ministry and EU levelNational databases on ELD dataCooperation between insurance associations and governments
Consider the legislative frameworkA voluntary financial security system at EU level enables Member States to assess their environmental situations in terms of:
risk awareness/risk perceptioncover available (eg advanced markets v. still-growing markets)government experience with carrying out ELD claimsinsurance needs of their industries
Caution against proposals that can impact insurance developmentEU-wide industrial fund
May distort competition for valuable insurance products, as companies must factor in the expense of contributing to the fundInsurance provides expertise that are not matched by state-run mechanismsAdministrative hurdles faced by insurers (eg execution of ELD claims, determination of damage) will similarly be faced by a fund
A free and competitive insurance market system can best suit individual risk needs
Information and publications accessible via Insurance Europe’s website, www.insuranceeurope.eu
