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Environmental Insurance Defined

Anthony Saunders is an insurance broker and specializes in the identification of environmental liabilities and creating environmental sustainability through insurance covers. Why? Without environmental insurance, the costs of rectifying unabated pollution weigh too heavily on society's ability to afford the recompense.

The importance of identifying potential Environmental liabilities is critical in the process of risk mitigation because an entity should assess if they are asset rich enough to financially provide for adverse environmental impact or if they should arrange to offset the potential liability that they may have with insurance. Why? The process highlights the investment necessary to exact precautionary measures to protect the environment.

If the entity has never considered environmental risk mitigation it's likely that their insurance excludes environmental liability. How do we know this? Environmental Liabilities are commonly excluded by all insurers. The exclusion is known as the "Pollution Exclusion". If you seek to get the cover, you need to speak to an insurance broker as they are able to search for the specialists who can help them arrange the cover.

Once in place, environmental liability insurance helps to create peace of mind for all concerned. How does this work you may ask?

An example (extreme unfortunately) is the Gulf of Mexico oil release from an oil well that was drilled by the Deepwater Horizon creating the largest man made and uncontrolled oil release known to mankind. Obviously risks were taken that resulted in the accident releasing tens of millions of barrels of oil into the Gulf of Mexico. Had environmental liability insurance been in place, it is argued that the accident would never have occurred, due to the insurance requirements mandating that robust risk protection measures needed to be deployed prior to exploration.

It is obvious that oil drilling is an inherently risky business but we need oil to sustain world infrastructure. Mandating environmental insurance could make energy exploration (at sea) unaffordable due to the high cost of robust risk mitigation. It's not the cost of environmental liability insurance that is the stumbling block it's the precautionary measures needed to be deployed that can make exploration unaffordable.

Hindsight is wonderful if we can use it to avoid such incidents (disasters) altogether through the use of environmental insurance and where there is disaster, the money will be there to clean up.

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