Since the release of Davis Guggenheim’s An Inconvenient Truth in 2006, the environmental impact of companies’ operation has started to come increasingly under the spotlight, with heightened public, media and government scrutiny around the world.
Companies are aware of this new reality: according to ACE’s Emerging Risks Barometer, companies across Europe, the Middle East and Africa view environmental risk as the second most likely risk to have significant financial impact on their business in the next two years. At the same time environmental risk has stopped being an issue for companies that “traditionally” pollute; it is now a cause of worry for all industries globally and in South Africa.
How can companies then ensure that if an incident that has impact on the environment does occur they can manage the consequences, continue operating and protect their brand? FAnews caught up with Lee Stacey, Head of Casualty at ACE to find out more about the company’s new environmental insurance offering.
Covering all the bases
Experience shows that in most cases, the majority of the cost, or costs, of an environmental incident are dedicated to cleaning up the contaminated zone. Today, some companies are not adequately covered to face the financial consequences of such an incident. Their insurance cover, provided under property and casualty policies, offers limited coverage to address the possible effects of an environmental incident.
“In respect of our clean-up cost and biodiversity impacts, the Bartoline case in the UK identified a gap in broad form liability wordings. The damage caused by the pollution was covered, but the additional costs of cleaning up were not and biodiversity damage was an unknown factor back then. It has now evolved as a specific cover over the past few years,” comments Lee. She adds that more onerous global regulation has meant that there has been a growing need across the world for environmental coverage. “Added to this, clients are becoming more aware of the costs involved in first party losses which are not covered by their Assets programs, or by the Sudden and Accidental Third Party coverage within the liability wording,” she says.
Getting value for money
The product is designed to suit the needs of a wide range of businesses, including real estate owners and developers, manufacturing, paper and food companies as well as the construction and waste industry companies.
“At ACE South Africa we want to take the best of our global offering and expertise in environmental risk and make it available to companies in South Africa. Our proposition includes cover for first party remediation costs, it does not differentiate between sudden, accidental and gradual pollution, it includes defence costs, and the trigger is broad with regards to territorial constraints on law and regulations. All in all, we give companies in South Africa the comprehensive environmental risk cover they need to confront this new and important risk,” suggests Lee.
Because of the fact that environmental management programmes are increasingly playing a significant role in any industry, be it global or local, Lee sees good growth opportunities for the proposition. “We will continue to monitor local and international legal positions and claims patterns to make changes to the product. We want to ensure that it stays relevant for this market. And we always welcome feedback from our clients and brokers,” says Lee.
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