Insurance brokers have an intrinsic role to play in creating a sustainable environment (built or otherwise).
The insurance sector achieves this by issuing covers that provide the necessary funds to return the environment back to the same condition it was in prior to the degradation (‘reinstatement’). The processes involved in environmental repatriation (or remediation) will vary depending on the funds available. Some sites (such as service stations) remain abandoned.
In the US, lawyers make mincemeat of insurance brokers for issuing covers that ought to have protected the insured for their pollution risks. Not understanding the inherent risks associated with the business is no defense, so here are some tips:
• Insist that insurers explain the purpose behind the pollution/environmental exclusions that are beginning to appear in every single policy.
• Risk surveys can be designed to prompt the right questions to identify pollution risk, but what are we doing as an insurance community to protect our environment? How does the issuance of correct insurance help?
• The cost of environmental insurance is not the stumbling block; it’s the cost of environmental security, the risk management procedures that safeguard our environment.
• Environmental insurance is not only affordable; it increases awareness to risk and deployment of material strategies.
Climate change has resulted in world ‘100 year’ phenomena events including massive floods, tsunamis, tornados, hurricanes and earthquakes, and our need for resources has resulted in factual significant loss of environment. If insured, how would the story change? Would nuclear reactors be built in tsunami zones? Would they be built at all?
The intrinsic values of insurance can be championed effectively by insurance brokers who have arguably the greatest significance in the chain of true corporate social responsibility. For example, a service station owner may avoid having to report a leaking underground storage tank if there was no professional indemnity insurance policy in place. When insured, we have an obligation to act responsibly and be accountable without fear.
The ability to address environmental risk is the intrinsic role that insurance brokers must play if we are to take up the ranks as contributors to enhancing environmental security (and avoid litigation). Through correct insurance, we can educate our community and environmental advisors of the importance of respecting the laws governing the protection and sustainability of our environment, simply by issuing policies that will respond to those laws. Insurance advisors at all levels have a very important role to play, and becoming educated in the inherent environmental risks associated with the many and varied professions that insurance brokers come across is essential.
The community also needs to understand how our environment can be protected by encouraging them to raise the question of insurance! For example, if proposed commercialisation of coal seam gas extraction (commonly termed ‘fracking’) is generating so much community concern, why don’t we ask; “if insurance is arranged to cover the future liability associated with possible contamination of groundwater or loss of use of land, what risk measures need to be employed?”*
We need a whole new breed of environmental insurance advisors adept in interpreting the fortuitous components of potential environmental liability.
*Lawyers in the US have mapped cancer clusters and superimposed them over the myriad of fracking sites dotting the country. Guess what, the sites overlay the cluster areas.
This is a slightly amended version of an article written by Anthony Saunders, insurance broker, plus risk transfer and environmental insurance specialist at EnviroSure. It has been shortened to make it suitable for web publishing.