Environmental Liability Insurance & Risk Management

Environmental liabilities present a growing risk to all businesses. As environmental regulation continues to develop around the world, companies are faced with a minefield of potential compliance issues, uninsured exposures and increasing accountability for their impact on the public and the environment.

Polluting incidents can have severe, immediate repercussions from both a financial and reputational standpoint. Traditional general liability, directors and officers and property insurance policies are not designed to meet evolving demands from regulators in respect to environmental and pollution damage, nor do they provide the emergency and specialist assistance required to deal with an incident.

JLT’s experienced team of environmental specialists help businesses navigate the complex arena of environmental liability, ensuring rapid delivery of a tailored environmental programme when businesses need it. Our experience in the market provides us with access to some of the best international insurers, who are able to deliver programmes anywhere in the world.

KEY SECTORS

WHAT WE DO

Environmental Liability Insurance & Risk Management

Our team provides access to a full suite of specialist insurance products designed to protect organisations and their directors and officers against existing and emerging environmental risks and liabilities. Our products can be tailored to the specific exposures associated with any operation in both the public and private sector.

Where environmental liability is concerned, there are a number of potential areas where an organisation could be exposed to uninsured losses, including major business interruption costs, loss of profits, increased costs of working and loss of rent due to enforcement from a local agency as a result of lax environmental practices, an unfolding incident or poor management of such an incident. Business interruption, property and casualty policies greatly restrict the cover applicable to pollution-related claims.

Environmental Liability Insurance & Risk Management

Other areas of exposure include legal defence and mitigation costs incurred, for environmental or third party damage the business may not have caused:

  • Cyber-attacks resulting in the failure of safeguard measures
  • Unintentional damage to the environment through usual business operations posing a threat to protected habitats and land (under the European Liability Directive or equivalent local laws)
  • Controlled waters and presenting an additional investigative burden upon directors and officers.

With access to first-hand experience of the London insurance market, we can leverage relationships to our clients’ benefit.

FAQs

Depending on the risk transfer requirements, whether operational risk, historic pollution liability or risks from developing land, covers available include:

  • Clean-up costs on your site and migrating from your site
  • Environmental & pollution policies
  • Third party bodily injury and property damage
  • Gradual pollution as well as sudden and accidental
  • Remediation costs (including investigation costs)
  • Environmental damage without pollution trigger
  • First party business interruption
  • Restoration of environmentally damaged sites including complimentary and compensatory actions required by law
  • Loss prevention and mitigation
  • Emergency costs
  • Transportation and offsite activities
  • Defence and assessment of claims
  • Nuisance claims including odour
  • Protection for directors & officers
  • Historic pollution

Additional benefits include access to professional, reliable and specialised response support in the event of a pollution incident as well as specialist environmental claims expertise.

In the event of a pollution incident, there will be cover under an environmental policy for the immediate actions needed to prevent or mitigate the incident from getting worse. There would be no issue as to whether the event was sudden and accidental because under an environmental policy, pollution is pollution.

Environmental impairment liability policies fill the gaps in a standard general liability and property programme - in some circumstances clients are unaware that their coverage does not extend as far as environmental liability. Consider that you may have no cover for gradual pollution, remediation of your own site, biodiversity damage or statutory liabilities for remediation or for dealing with imminent threats.

Property policies provide cover for claims resulting from insured damage, but cannot be relied upon to provide full protection for environmental liabilities.

There are several reasons for this. Firstly, cover is only provided in respect of specific buildings and does not as a general rule include land. Secondly, whilst resultant environmental damage to insured buildings may be covered, if contamination enters the soil remediation costs are unlikely to be picked up. Thirdly, many property policies incorporate a qualified or absolute pollution exclusion. Finally, where coverage is provided it is often tied to sudden and accidental events only and sub-limited at an inadequate value.

The overarching principle of environmental liability is ‘polluter pays’, but if the polluter cannot be found the secondary port of call is usually the property owner. There are also instances in sale and purchase agreements where the contaminated land liability is transferred by contract, which means you may have pay to clean-up a contamination on your site.

When a pollution incident occurs the only reported number tends to be the fine imposed. Fines are intended to deter the operator from reoffending and are not insurable by law in most jurisdictions. However, operators also face background costs such as the clean-up operation, defence, long term remediation and monitoring. In addition, support from the right people can be invaluable in the aftermath of an incident.

Due to a large increase in numbers of carriers providing standalone environmental product in recent years, competition has increased, reducing price and information requirements dramatically. JLT is one of the leading specialty brokers, a position we use when negotiating on your behalf.

Key Facts

200% Increase in the level of environmental placement in 2017-18GBP 5 Million + placed into the London market400 million+ environmental capacity accessible in the London marketsOne of the largest environmental broking teams in London

WHY JLT

Companies see environmental exposures as one of their biggest emerging risks and our global team have the underwriting, engineering, consulting, claims and wordings expertise to provide market leading advice.

This expertise has resulted in a 200% increase in the level of environmental placement in 2017-2018. This has been matched by a doubling in size of the environmental specialist team, which has access to GBP 400 million of environmental capacity in Lloyds and London markets.

Our specialist knowledge of key industry areas is complimented by strong and diverse relationships across the specialty insurance market and access to traditional and emerging markets through the JLT International Network.

We work closely with clients to structure a policy that mirrors their risk profile and transfers the appropriate level of risk to the right insurer.

Additional services include:

  • Programme gap analysis - identifying coverage gaps in existing programmes, discussing how these could impact a business and the extent to which they can be covered
  • Global programme advice - including where legal and regulatory regimes may require local policies or heightened environmental due diligence
  • Risk solutions - through our engineering team, we are able to provide fee-based surveys and advice to support clients in reducing programme premiums
  • Claims liaison and support - our claims advocacy team have experience across a number of complex environmental claims, ensuring the best interests of our clients are represented.

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