A broker guide to selling EIL insurance

Environmental insurance offers attractive development opportunities for brokers and is here to stay.

AN EMERGING RISK

Environmental exposures have been amplified by a tougher legal environment throughout the EU which introduced new concepts such as damage to biodiversity and more stringent clean-up requirements. This means that even though businesses’ operations may not have changed, their potential environmental liabilities have increased.

A BIG, SENSITISED MARKET

Businesses in all industries and of all sizes face environmental liabilities. Obligations for both companies and competent authorities point towards an increase in both number and costs of environmental claims – which combined with attention from the media, have encouraged greater awareness of environmental issues by businesses, investors and customers.

STRONG COMPETITIVE POSITIONING

Brokers who are able to have meaningful conversations about environmental insurance with clients are able to differentiate themselves from competing brokers who may not have the same degree of risk and product knowledge. This has exciting possibilities for new business and retention strategies and reaffirms brokers’ position as valued and informed risk advisors.

DIRECTORS & MANAGERS ARE PERSONALLY EXPOSED

Following an environmental incident, individuals also face the possibility of personal actions. In fact, some local regulations might hold directors and managers personally liable for the damages. It is worth emphasising the complexity of environmental risks and the high importance of EIL insurance to the directors and managers deciding on the business’ insurance coverages.

INTERNATIONAL OPPORTUNITIES

Countries have different local environmental legislation and have adopted the European directive on environmental liability in different ways – in several (Spain, Portugal, Slovakia and Czech Republic for example) businesses may need to demonstrate that they have financial assurance in place for their environmental exposures (such as a locally issued EIL policy) in order to operate in that country.