Environment insurer responds

‘Environmental liability is not uninsurable,’ emphasised Simon White, environmental manager, XL Insurance. He was responding to Phil Bell of R&SA’s comments in yesterday’s headline story on the problems of providing insurance to cover liabilities under the new European environmental directive. White acknowledged that the directive is very complex. ‘It is introducing new ideas which we have not seen before in the EU,’ he said. ‘There are still a lot of question marks with regards to the details. But the specialist environmental insurance market has spent a lot of time and effort in examining the directive and its implications, and amending cover to meet the new requirements.’

He explained that, while liability for natural resources damage was new to the EU, it had existed in the US since 1986. ‘Nobody knew exactly what was going to happen with these damages but insurers were prepared to analyse the risks and offer cover.’

White said that there was no danger of the specialist environmental market withdrawing insurance if large claims began to emerge. ‘We have seen some phenomenally large natural resources claims, the largest one being the Exxon Valdez oil spill in Alaska which cost over $1bn, but cover is still readily available in the US.’

He continued: ‘The reason why environmental insurers say the risk is insurable is because of their resources – environmental consultants and engineers, attorneys who specialise in environmental claims. They have people on board who understand the risk.