Mandatory pollution insurance receives mixed reaction.

• Author: McDougall, Douglas

Mandatory pollution insurance receives mixed reaction

The concept of mandatory liability insurance for environmental damage has drawn a mixed reaction from the insurance industry.

Chris Rhind, president and chief executive officer of the Insurance Institute of Canada, believes that making pollution insurance mandatory is a "two-edged sword."

He said that although environmental safety and clean-up is necessary, and that industry is hard-pressed to pay the costs without incentives, the insurance industry is not the one to foot the bill.

"I don't think the (insurance) industry should be made the responsible party for cleaning up environmental damage," he said.

"If insurance companies provide the coverage then, in effect, they are letting the (polluting) companies off the hook," he said.

Rhind was commenting on a statement made by Environment Minister Jim Bradley at a conference attended by some 300 members of the insurance industry in May.

The minister said he could foresee the day when insurance policies will be required for businesses whose activities pose a risk to the environment.

"If you provide a fail-safe for those who pollute the environment, does that encourage the act?" questions Rhind.

The answer is no, according to David Eastaugh, president of Ian Elliot Limited, a Canadian insurance wholesaler with offices in Toronto and Montreal.

Eastaugh, whose company has been underwriting environmental liability insurance policies for the past five years, said the only people or companies his firm will insure are those who are currently attempting to control their own risk. Otherwise, he said the risk involved in insuring these companies is too great.

"You must provide support to companies which are already getting involved," he said.

Eastaugh, also a guest speaker at the insurance industry conference, explained that Bradley made the comment after being asked what he thought would happen if insurance companies proved reluctant to become part of environmental issues.

"He (Bradley) was just responding to a type of worst-case scenario," said Eastaugh.

However, Eastaugh agrees with the environment minister, that insurance companies must play a larger role by offering a form of coverage.

He admitted that insurers are currently reluctant to get involved.

From his Toronto office, the insurance executive explained that a form of pollution insurance was offered some years ago by most firms. However, when environmental safety issues became better...