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2024 | Book

Law and Environment. Prevention, Control, Responsibility Read chapter Read first chapter

Managing Environmental Risks through Insurance

Legal and Economic Aspects

Editors: Katarzyna Malinowska, Dorota Maśniak

Publisher: Springer Nature Switzerland

Book Series : AIDA Europe Research Series on Insurance Law and Regulation

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

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About this book

This book identifies the role of insurance in a comprehensive system for managing environmental risks at the local, regional and global level. National and international legal instruments regulating environmental protection, especially aspects like pollution, are not precisely reflected in insurance concepts intended to cover environmental risks. As such, there is a need to identify environmental risks and to propose a taxonomy of environmental risks for various types of insurance coverage. The authors refer to the issues of liability in environmental protection, the scope of insurance coverage and comment on specific issues the importance of which has been noticed by the legislator or insurance practice.

The book examines these issues horizontally and vertically from various standpoints, focusing on insurance as a means of managing environmental risks. In this regard, it mainly concentrates on (1) identifying and analyzing environmental risks and methods for managing them via private and public instruments, and (2) insuring these risks.

The book is intended for all those interested in the field of insurance and environmental risk regimes, including lawyers, academics and legal professionals.

Table of Contents

Frontmatter
Law and Environment. Prevention, Control, Responsibility
Abstract
The future of our planet depends primarily on technological and technical security in the IT and AI sectors. Awareness of the transition from cultural life (parallel civilisations, Life 2.0) to technological life (global civilisation, Life 3.0) is still negligible. Those who have struck out to be aware of the present are necessarily alone in their views. The state of collective unconsciousness results in a lack of appropriate response to all kinds of dangers that threaten humanity. Today, the idea of ‘Sustainable Development’ is in the spotlight. Sustainable development is shaping environmental consciousness with a significant impact on ethics, politics and law. At the core of this noble idea is the ‘Golden Rule’, which for centuries has committed to a balance between ethical values (humanity and justice) and praxeological values (efficiency as a synthesis of lawfulness and rationality) in the context of technology, governance and law. What seems urgent today is, taking the above into account, the need to create a system of effective international control. The power of the law also depends on the responsibility incumbent on the individual or collective. In environmental protection, preventive liability is leading the way, permeating the international responsibility of states and civil, criminal and administrative, tortfeasors’ liability. The low level of legal culture means that it is still not appreciated in the practice of international, regional and national relations. In the real world, what counts above all is compensation liability, the effectiveness of which is ensured by insurance and public compensation funds. They ensure that risks are spread across a wide variety of actors and that the game is played in many arenas. The objective of the chapter is to present the idea of the evolution of the civilisation in the context of the rules of law, technology and their impact on environment and human future in that context. It begins with the dawn of the civilisation, goes through the first industrial revolution, the second scientific and technological revolution and finally reaches the analysis of the third—information revolution.
Zdzisław Brodecki

Overview of the Environmental Liability and Insurance Regulations

Frontmatter
Global Governance of the Environment and Implications for the Insurance Industry
Abstract
The insurance industry has historically had to respond to risks that corresponded to societal developments, changes in industrial practices and international conflict. Existing challenges for business and industry relating to the risks concerning the environment and society represent a new frontier that requires innovation and strategic assessment.
However, there is another dimension to the challenges faced by the insurance industry which is often overshadowed by the immediate nature of impacts upon the environment and society. This is that global environmental governance itself is changing, as are the responsibilities that businesses have in relation to human rights. The expectations of the international community relating to human rights and the environment, through corporate law, WTO law and international investment law are all changing in ways that will have major implications for the insurance sector.
Therefore, it is arguable that the insurance industry should not only be anticipating physical and commercial risks but engaging more proactively with the processes of change in global governance. The reason for this is due to the pivotal leadership role that the insurance industry can potentially play in the design and development of global governance systems that meet the needs of the international community. This chapter maps out the changes taking place in global governance systems and the important role that the insurance industy can potentially play in those processes.
Stephen J. Turner, Claire Bright
Environmental Liabilities and Insurance Law in the European Union
Abstract
Each Member State of the European Union (EU) imposes tort liability, including liability from exposure to pollutants and other environmental damage. The liabilities are set out in civil codes, laws of obligations, and similar legislation. Some Member States include liability for pure economic loss as well as bodily injury and property damage. In addition, many Member States impose liability for remediating historic land contamination that continues to pose a risk to human health and the environment.
The predominant environmental permitting legislation in the EU is EU legislation, which is accompanied in most Member States by more extensive national environmental permitting legislation and, in some Member States, environmental liability legislation. Since 2007, EU legislation has imposed liability for preventing and remediating pollution and other environmental damage including damage to natural resources.
Insurance that provides cover for environmental liabilities, including tort claims and costs of remediating environmental damage, differs substantially between Member States. Whereas large and multinational companies tend to have no problem in purchasing environmental insurance policies, the policies are not always available to companies that have sites and/or operations in a single Member State. The policies are widely available to such companies in some Member States but available only to a limited extent or not at all in other Member States. Environmental extensions to general liability policies tend to be widely available in most Member States with the caveat that cover provided by them is limited or severely limited except in Austria and Germany.
A few Member States have imposed mandatory financial security for the prevention and remediation of environmental damage under EU legislation. A much larger number have imposed mandatory financial security on persons that carry out waste operations or other specified operations. The requirements differ substantially between Member States.
This chapter examines EU and national environmental liabilities, insurance for such liabilities, and mandatory financial security for them.
Valerie Fogleman
Environmental Liabilities and Insurance Law in the United Kingdom
Abstract
Individuals in the United Kingdom (UK) who suffer bodily injury and property damage from exposure to pollutants or other environmental damage have long been able to make claims against persons that caused the damage, with common law torts in England, Wales and Northern Ireland differing from civil law torts in Scotland.
Environmental legislation, especially from the early 1990s, substantially increased the liabilities with the introduction of more extensive environmental permitting and liability legislation. Most environmental legislation in this modern era originated in the European Union (EU). As a result, over 95% of environmental law in the UK is EU law or, as it has been called since the UK left the EU on 31 January 2020, ‘retained EU law’.
Since 1998, environmental law in England, Scotland, Wales and Northern Ireland has increasingly diverged in each region as a result of devolution. The environmental is a devolved matter, which means that each government may enact its own environmental legislation. Whereas the extent of the differences was mitigated when the UK was a Member State of the EU, the differences have steadily increased since 31 January 2020.
The increase in environmental liabilities in the modern era of environmental law led insurers in the UK to include a pollution exclusion in public liability policies. At about the same time, some insurers—mostly affiliates of US insurers—began introducing environmental insurance policies for risks across the UK. Insurers subsequently also began offering extensions to public liability policies to provide cover for remediating off-site pollution from sudden and accidental incidents on an insured’s site.
This chapter will examine tort and statutory environmental liabilities in the UK and insurance that provides cover for them.
Valerie Fogleman
Managing Environmental Risk Through Insurance: China
Abstract
In the context of China, this chapter explores the role of insurance in compensating for environmental damages and regulating environmental risk. On the one hand, insurance is one of the most promising mechanisms to compensate for damage caused by pollution due to its mechanism to cover environmental pollution accidents. On the other hand, insurance could work as a regulatory tool to mitigate environmental pollution through ex ante governance. However, due to the inherent challenges of environmental risk and China’s legal system, insurance faces difficulties in developing environmental insurance products and functioning as theoretically expected. We propose some potential proposals such as mandatory environmental insurance and private-public partnerships which enhance private insurance to address environmental risk.
Qihao He, Jing Liu
Environmental Liabilities and Insurance Law in the United States
Abstract
State common law in the United States (US) has long imposed liability for bodily injury and property damage caused by persons that expose individuals to pollutants as well as causing other harm to them. In the 1970s, the scope of liability for environmental damage was substantially increased when the US Congress enacted extensive permitting legislation for waste, water and air pollution. Among other things, the legislation required permit holders to clean up environmental damage caused by their operations. In 1980, the scope of environmental liabilities was increased again when Congress introduced a programme, called the Superfund programme, and liability for cleaning up historic land contamination that continued to pose a serious risk to human health and the environment. The legislation also introduced liability for restoring damage to natural resources.
Enforcement of the Superfund programme resulted in insureds being liable for many millions of dollars of costs for cleaning up the contamination. In turn, insureds claimed against their commercial general liability policies, resulting in massive litigation. Another result of the increased environmental legislation was the introduction of pollution exclusions in primary and excess general liability policies. In turn, various insurers developed environmental insurance policies that specifically provide cover for the liabilities as well as policies that provide evidence of mandatory financial security for specified environmental liabilities.
This chapter examines environmental liabilities in the US, insurance for them, and mandatory requirements for insurance policies and other financial security instruments and mechanisms.
Valerie Fogleman
Environmental Civil Liability in the Mercosur Region South America
Abstract
In this chapter, from a theoretical approach, we deal in this first section with environmental responsibility, environmental damage in the Argentine Republic, civil liability derived from ecological damage, the causality assumption, the role of the judge in the environmental process, and the sanctions to environmental damage. Under the subheading Environmental Protection, we develop the precautionary principle as an instrument of environmental policy and management, the Role of the Judge in environmental protection and its powers to issue precautionary measures, and the Responsibility of the State and its obligation to take appropriate measures for environmental protection. On the other hand, we analyze under this same title the prevention and cessation of the damage, and the preventive claim of the damage with the cardinal rule of the principle of prevention. With a comprehensive vision, we raise the issue of environmental insurance, we analyze from the empirical point of view, the three regulations that give rise to it, and we mention in the jurisprudence of three leading cases. Finally, we conclude with environmental damage and insurance activity, with reference to Joint Resolution 2/2019 of the National Insurance Superintendence that expresses the basic guidelines for the contractual conditions of insurance policies.
In the second section of chap. 6, from a theoretical approach, we analyze the Environmental Constitutional Guardianship as protection of the environment; the Environmental Impact Assessment Law that provides for the protection of the environment, the prevention of environmental impact, and the recomposition of the damaged environment. On the other hand, under subheading Environmental Damage, we interpret Article 3 of Law No. 17,283 followed by the statement of objective/subjective responsibility. Under the subheading Procedural Legal System, we analyze the particularities of the system. Regarding Urgent Consideration Law No. 19,889 and the environment, it is worth mentioning that the rule gives rise to the creation of the Ministry of the Environment. To conclude, in relation to the project of the Norm on Environmental Responsibility being studied in the Parliament, the future regulation of said provision will determine the terms, limits, and conditions of environmental insurance.
In the third section of chap. 6, we discuss the topics related to environmental responsibility in Chilean legislation. Under the subheading Concepts, we develop the precepts of Law No. 19,300 on General Bases of the Environment and the general regulations on civil liability derived from environmental damage. On the other hand, we analyze the role of the state represented by the government entities responsible for authorizing and supervising activities that produce environmental impacts or contamination and the procedural legal system in case of environmental infractions. Finally, and applying a global approach to what is discussed in this section, we consider it relevant to mention the environmental liability policy marketed by the Chubb de Chile insurer.
Maria Kavanagh, Ricardo Peralta Larrain, Roxana Corbrán

The Practice of Insurance Coverage of the Environmental Risks

Frontmatter
Environmental Insurance Product
Abstract
The unclear meaning of the terms “environment” and “risk” and, as a result, the ambiguous concept of “environmental risk” makes one look for protection from this risk in many insurance products. However, not all of them bear the attributes of an environmental insurance product. This chapter proposes a definition of an environmental insurance product, with environmental underwriting as its main determinant. The basic classification of environmental insurance was indicated, and—from a historical perspective—the process of its evolution was presented.
Malwina Lemkowska
Prevention in Environmental Insurance
Abstract
The goal of the chapter is to analyse the preventive aspect of insurance covering environmental risks. This seems important for a few reasons. Firstly, the general goal of environmental liability insurance is to follow the liability legal regime, which has started including prevention as an inherent part of the environmental liability regime. Secondly, it coincides with the visibly changing paradigm of the role of insurance, i.e., from risk transfer to risk prevention, which can be observed in many new innovative insurance products, which are slowly infiltrating the general function of insurance. Environmental risks seem to be a very relevant field for enhancing new forms of insurance prevention, in both the macro- and micro-scales. What is more, it is interesting to consider prevention as a field for cooperation between the insurance industry and governments (for example in the form of prevention funds). Thus, a thesis can be made about the synergistic effect of environmental liability legislation and the preventive function performed by insurance. Also, another issue appears, i.e. whether prevention as an express part of the insurance contract needs to be regulated in private law as an emanation of the principle of good faith or the principle of indemnity or could eventually be taken into account as part of insurance market regulation as a reflection of sustainable development. Thus, it will be discussed the issue of whether prevention can be directly linked to sustainable development on both the level of the insured organisations (or individuals) and the level of societies.
Katarzyna Malinowska
Loss Adjustment in the Environmental Insurance and the Role of the Loss Adjuster
Abstract
The chapter focuses on the loss adjustment service under an Environmental Impairment Liability cover. Within the loss adjustment aspects, the chapter will encompass the actions to be taken, starting from notifying the authorities, developing and implementing the remediation plan, and maintaining geotechnical, hydrological, or baseline and biotope investigations. Finally, the remediation operation is the last part of the loss adjustment process.
Considering the above complexity of the environmental damages, the role of the loss adjuster seems invaluable.
Mark Vos

Specific Issues

Frontmatter
Liability for Wastes and Its Insurance
Abstract
The study is the result of an analysis of EU legal conditions supporting rational ecological waste management. The starting point for a deeper analysis was the creation of a conceptual apparatus related to the definition of insurance waste risk. The use of insurance as financial security for claims related to waste management is influenced by the principles of EU law: the polluter pays principle or the extended producer responsibility principle. American jurisprudence was also analyzed in order to find an answer to the question of to what extent the American insurance market is prepared to cover this type of risk. The American insurance market can be considered mature, also in the field of waste insurance, as indicated by the analysis of selected judgments.
Dorota Maśniak
Underwriting Environmental Risks for Carbon Capture Usage and Storage (CCUS) Coverage: Challenges and Best Practices Forward
Abstract
The Paris Agreement on climate change is calling for mitigating techniques, such as carbon capture, use, and storage (CCUS) to reduce carbon emissions. Insurance can help carbon (CO2) mitigation and promote the tackling of the pace of acceleration of climate change. This chapter proposes to examine the international environmental law regime and the contribution of CO2 capture to the resolution of the climate change problem and to evaluate the role of insurance for CCUS technology and consider parameters of insurance coverage in terms of CCUS, as such coverage. The provision of adequate insurance cover will allow a real expansion in the deployment of the CCUS technology at a large scale. It will assess new solutions in insurance products for CCS coverage to offer guidance to the insurance market on how to obtain better coverage and to provide insurers with a window of opportunity to grow their product base and encourage lobbying efforts for legislation favorable to the insurance industry. Such enactment of specific further statutory regulations will offer great benefits to the insurance market and potential policyholders as it will provide benefits such as the lowering of the price of CCS liability insurance.
Kyriaki Noussia
Liability for Environmental Damages in Aviation
Abstract
This chapter is a basic introduction to international liability for environmental damages in aviation. It defines environmental law in the context of aviation. This discipline is quite new and important. It concerns private international aviation law. It is worth mentioning that this discipline is not based on only one international act or convention, but it consists of different regulations: on the global and regional scales. Environmental damages (aircraft emissions or aircraft noise) are connected to the liability of different entities, such as airlines, airport operators, or others, so is necessary to know the rules in case to eliminate risks connected to civil aviation. All aviation actors should be involved in creating international standards and regulations in environment liability.
Małgorzata Polkowska
Liability for Environmental Damage in Outer Space and Its Insurance
Abstract
In the ongoing discussion on space sustainability, an important aspect concerns the regime of liability for damages caused to the space environment. Apart from the general regulations that can be found in the canon of international space law, specific provisions for environmental protection are scarce. Despite many efforts, it has not yet been possible to create international regulations of a universal and binding nature that would adequately protect the outer space environment. The process of creating such regulations also seems to be ineffective due to the dynamic development of the commercial space sector and, consequently, the growing amount of space debris, which poses a real threat not only in space but also on Earth. In response to this challenge, many countries are referring environmental issues to the national liability regime related to indigenous space activities. Internationally recognized guidelines and standards that minimize the risk of damage are helpful in this regard, but their application may be questionable due to their heterogeneous nature. This implies considerable legal uncertainty, not only for the interests of the state but especially for private entities that have to meet the relevant requirements. The aim of the authors is to indicate the existing liability regime for environmental damage in space based on both international law and national space legislation. Environmental law has received particular attention in this analysis. Furthermore, the authors present legislative gaps that need to be filled in order to meet current challenges regarding sustainable space development. In addition to indicating the elements of the space environment, the authors seek to identify the spatial aspect of outer space. Finally, the authors propose space insurance as an incentive tool for protecting the space environment.
Katarzyna Malinowska, Kaja Hopej
Liability for Pollution Damage to the Marine Environment
Abstract
This chapter discusses some aspects of liability for pollution damage caused to the marine environment, focusing on the general obligations developed mainly under the law of the sea, which requires States to take measures to prevent, reduce, and control the pollution of the marine environment. The United Nations Convention on the Law of the Sea (UNCLOS) reaffirms the principle of civil liability of natural and legal persons for marine pollution, but it is the responsibility of States to ensure that claims are pursued in accordance with their legal systems in order to obtain prompt and adequate compensation or to otherwise provide indemnity for the damage caused. Despite nearly three decades from the entry into force of UNCLOS, the obligation of States to further develop international law not only concerning international responsibility but also civil liability is still extremely valid.
Dorota Pyć
Metadata
Title
Managing Environmental Risks through Insurance
Editors
Katarzyna Malinowska
Dorota Maśniak
Copyright Year
2024
Electronic ISBN
978-3-031-47602-0
Print ISBN
978-3-031-47601-3
DOI
https://doi.org/10.1007/978-3-031-47602-0