Update on recent insurance for ELD developm ents 1 3 th EC ELD national experts m eeting European Com m ission, Brussels 1 0 June 2 0 1 3 Carm en Bell Non-life I nsurance Departm ent I nsurance Europe
Agenda item s Overview of presentation 1 Insurance Europe 2 Risk assessment 3 Awareness 4 Types of liability products 5 Insurers’ experiences 6 Conclusions 2
I nsurance Europe European insurance and reinsurance federation, W ho? founded in 1953 Represents around 95% of European insurance market by W hat? premium income Committed to creation of favourable regulatory and supervisory framework for insurers at European and W hy? international level. 3
I nsurance Europe - Mem bers 3 4 national associations 2 6 EU m em ber states 6 non-EU m arkets Croatia, Switzerland, Iceland, Norway, Turkey, Liechtenstein 2 associate m em bers Serbia, San Marino 3 partners Russia, Ukraine, Kosovo 4
Risk assessm ent tools W hat do these tools identify? Geographical location of potential risk of pollution Individual risks in protected areas, waterways, etc (eg DE) Different costs for remediation of damage Exam ples DE – GDV ZÜRS ES – access to state ministry mechanism (MORA) FR – Assurpol “3-step process” UK – Larger members in London market with online tools Independent consultations? Tend to focus on modelling environmental liability rather than the actual environmental damage. Do not always provide loss prevention or size of potential loss 5
Risk assessm ent tools Barriers can exist for further developm ent of these tools Need for funding ( difficult w ith econom ic dow nturn) Need for access to data ( lack of central database) Need for consum er interest ( lack on dem and from clients/ state) 6
Aw areness Source of problem ? Factors • ELD claims not declare • SMEs unaware of ELD risks • SMEs unaware their cover does not include ELD risk • Economic downturn Lack of demand for ELD cover 7
Aw areness W hat is the insurance sector doing? National ins EU level Surveys and Ongoing assoc Social m edia ( I nsurance publications consult w ith sem inars ( I T) Europe) ( ES, FR, UK) govt ( GR) ( CZ) I ncreased aw areness 8
Aw areness ELD aw areness can be increased w ith continued cooperation EC conferences and sem inars National govt cam paigns I nsurance association and com pany publications on ELD risks 9
Types of liability products Various types of cover for environm ental liability risks Stand-alone ( EI L, EL, EL GTPL Dam age) endorsem ent Business Property activities cover Professional I ndem nity 10
Types of liability products Categories include: Industrial sites Contractors cover Professionals cover Transport (road, rail, waterways) D&O cover Often excluded from cover Willful acts and willful failure to comply with regulations Damage caused by normal operations (ie foreseeable accidents) Gradual and accidental pollution (ie seepage of chemicals) GMOs previously excluded, though some start to cover 11
Types of liability products Non-binding m odel w ording To offer guidance on designing cover for ELD (DE, CH) Special terms and conditions for some sectors Business planning (eg architects) Transport Insurers and brokers also design their own wording to suit special customer needs Though not ELD, environm ental risk cover som etim es also includes: Bodily injury Property damage Business interruption 12
I nsurers’ experiences I ncreased data on ELD cases requires cooperation Need not just to execute claim s, but also close Pollution noted by Statistics skew ed by governm ent, but not focus on large as ELD accidents Penalties som etim es given instead of ELD 13
I nsurers’ experiences Environm ental risks not only about large pollution accidents Small and frequent losses from road accidents (leak of contaminants into soil) Fuel tank spills A more balanced portfolio (small and large risks) likely to result in more accurate risk data Need to factor in the risks of SMEs Future outlook Increasing experience for operators, insurers, brokers No “official” data, but stricter safety standards are leading to increased awareness about potential ELD claims Sharing of information at national and EU levels leads to more understanding 14
Conclusions Increase the risk data Continue cooperation at state ministry and EU level National databases on ELD data Cooperation between insurance associations and governments Consider the legislative framework A voluntary financial security system at EU level enables Member States to assess their environmental situations in terms of: risk awareness/ risk perception cover available (eg advanced markets v. still-growing markets) government experience with carrying out ELD claims insurance needs of their industries Caution against proposals that can impact insurance development EU-wide industrial fund May distort competition for valuable insurance products, as companies must factor in the expense of contributing to the fund Insurance provides expertise that are not matched by state-run mechanisms Administrative hurdles faced by insurers (eg execution of ELD claims, determination of damage) will similarly be faced by a fund A free and competitive insurance market system can best suit individual risk needs 15
I nform ation and publications accessible via I nsurance Europe’s w ebsite, w w w .insuranceeurope.eu Bell@insuranceeurope.eu
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