Insurance Europe examining the status of environmental liability insurance

markets generally across the EU

14th ELD national experts meeting European Commission Brussels, 3 February 2014

Carmen Bell Policy Advisor, Non-life Insurance

Insurance Europe

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Who?

What?

Why?

European insurance and reinsurance federation, founded in 1953

Represents around 95% of European insurance market by premium income

Committed to creation of favourable regulatory and supervisory framework for insurers at European and international level.

Members

34 national associations

27 EU member states

5 non-EU markets

Switzerland, Iceland, Norway, Turkey, Liechtenstein 2 associate members Serbia, San Marino

1 partner Russia

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Countries received to date (survey ongoing)

ELD Survey

Austria Belgium Cyprus Czech Republic Germany Greece Finland France

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Italy Latvia Portugal Spain Sweden Slovakia Switzerland United Kingdom

In most markets cover is available for all ELD risks

Type of ELD risks covered

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Primary remediation

Compensatory remediation

Complementary remediation

Remediation of land damage

Though some markets not yet covering ELD-specific risks

Type of ELD risks covered

Belgium Low response rate received Indicated environmental cover available, but not specifically for ELD Lack of demand for cover contributes to lack of supply Consider lack of reports from Belgian national authorities on ELD claims – tendency to rely on pre-existing water/soil legislation

Slovakia Only 3 companies offering ELD cover BUT most offered by foreign insurers (freedom of services)

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Diversity of solutions reflects the needs of the markets

Types of insurance solutions

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Stand-alone

• AT • CH • CY • CZ • DE • EL (mainly) • ES • FR • PT • SK • UK

Ext to GL cover

• AT (mainly) • CH • CZ • DE • EL • ES • FI • FR • LV (mainly) • PT • SE (mainly) • UK

Ext to EIL cover

• AT (incl clean-up costs)

• CH • CZ • DE • ES • FR • PT • SE

EL pools

• CH • ES • FR • IT • PT

Insurance cover can intersect with pools or other policies

Types of insurance solutions

DE reports that German insurers writing international programmes may reinsure environmental liability cover provided as part of Commercial General Liability local policies in other European states with a local pool (eg Assurpol in FR). LV reports some environmental liability cover addressed through MTPL insurance (eg transport of substances). While stand-alone products may have a single limit for environmental pollution, limits are harder to separate if environmental damage covered under general liability or professional/public indemnity policies.

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Amounts vary depending on demand as well as market capacity

Amount of cover

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25.000.000 – 50.000.000

EUR

1.000.000 – 5.000.000

EUR

40.000-100.000 EUR

Pools can offer far more capacity than demanded

Amount of cover

Pools can offer substantial capacity ES – 20m to 30m EUR FR – up to 50m EUR IT – up to 50m EUR

But typical demand is generally less

ES - 1m to 5m FR – 1m to 5m EUR IT – most policies less than 5m EUR

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Other long-standing markets also reveal growing capacity

Amount of cover

Again, typical demand may be far lower than available capacity and result in lower policy offerings

DE 5m EUR SME’s 10m EUR large enterprises 25-50m EUR for more (though not typical)

PT

100.000 to 500.000 EUR 2.5m to 5m EUR SME’s Higher limits available for larger companies

UK

1 to 5m EUR SME’s 5m to 10m EUR medium enterprises 10m to 30m large corporations

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Other reasons for low policy offerings

Amount of cover

Low demand can be due to low reporting of incidents EL – 500.000 to 1m EUR FI – 500.000 to 10m EUR SE – 500.000 to 1m EUR

Newer / emerging markets may have lower domestic offerings

LV – 250.000 EUR; possible up to 500.000 EUR SK – 50.000 to 100.000 EUR

Some markets increase capacity with foreign insurers

CY – 1m to 5m EUR CZ - 40.000 to 20m EUR

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Different risks covered by different markets

Damages covered by policies

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3rd party liability

Defence costs

1st party

damage

Less commonly covered : Site monitoring Mitigation costs Business interruption

Some damages appear more standard

Damages covered by policies

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TPL

•AT •CH •CY •CZ (mainly) •DE •EL (mainly) •ES •FI •FR •IT •LV •PT •SE •SK •UK

1st party

•AT •CH •CY •CZ •DE •EL •ES •FR •IT •PT •SE •SK •UK

Defence costs

•AT •CH •CZ •DE •EL (minimal) •ES •FI •FR •IT •LV •PT (though not standard)

•SE •SK •UK

Others vary more widely both in form and availability

Damages covered by policies

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Site monitoring

•AT •CH •CY (one company) •CZ (but minimal) •DE •EL •ES (one company without)

•PT (only for full remediation)

•IT •SE (minimal) •SK •UK

Business interruption

•AT •CH •CY •CZ (minimal) •DE (only by EIL or professional/public liability pdts)

•EL (minimal) •ES (minimal) •FR •IT •PT (only if asked by client)

•SE (minimal) •UK (though not standard)

Mitigation expenses

•AT •CH •CY •CZ •DE •EL •FR (minimal) •ES •IT •SE •SK •UK

Many markets can offer products on multinational basis, but consider that some markets still limited to domestic capacity

Geographic range

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BE (for pre-exist legis) CY CZ EL FR IT LV PT (though sometimes incl ES if transport risks) SE SK (one company ext to CZ)

AT (some world-wide) CH (some world-wide) CY (2 companies) DE EL (only 2 companies) ES FI FR (few) LV (some) SK (one company) UK

Dom

estic

(m

ainl

y)

Multinational

Few reports of ELD claims exist for a variety of reasons

ELD claims?

Late transposition in ELD resulting in little claims being field, meaning sufficient statistical data cannot be gathered and analysed by insurers

Case database may be incomplete due to lack of reporting by national authorities

Due to a combination of ELD risks into other covers, environmental damage may be classified under other fields (eg general liability)

ELD incidents in some markets (eg BE, DE, UK) may be mislabelled due to classification under national pre-existing legislation (eg pollution to waterways or soil)

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For more information

www.insuranceeurope.eu bell@insuranceeurope.eu