ACE has acquired Chubb, creating a global insurance leader operating under the renowned Chubb name. Chubb is the world’s largest publicly traded property and casualty insurer, with operations in 54 countries, exceptional financial strength, and a broad range of personal and commercial insurance products.
At Chubb, we’re committed to providing the very best insurance coverage and service to individuals and families, and businesses of all sizes. While we may look different, rest assured that all current ACE and Chubb policies remain in place.
Pollution incidents – How can companies be prepared?
Pollution incidents can happen when they are least expected. Marcus Alcock finds out how companies can be prepared.
Despite a much more stringent regulatory focus on environmental pollution in recent years, and the best efforts of risk managers, pollution incidents will continue to dog even the best-intentioned businesses.
Just look at Caterpillar Northern Ireland, which made the headlines in the summer as the source of a big diesel spill off the County Antrim coast. According to the company, the diesel had found its way into a storm drain that runs out to the sea, and was part of a bigger on-site spill.
As Nicky Eury, a principal at environment and health consultancy firm Ramboll Environ, points out, although the majority of companies apply good environmental management practices, human and infrastructure failings are still commonplace.
“Even though there are a lot of responsible companies out there, the fact is that accidents will always happen. And it can be difficult to identify significant bottom-line risks, particularly in the case of acute pollution [sudden and accidental], whereas historic contamination issues are somewhat easier to predict,” says Nicky, who has more than 25 years’ experience in corporate environmental risk management.
Besides, she adds, the most concerning issues are not necessarily the high-profile incidents that tend to make the press, but what she calls ‘mid-point’ ones. “For example, a watercourse that is located in a sensitive setting could suffer significant environmental damage, even though the same level of spill in another system may cause little harm.”
However, historic site contamination can also come as a surprise. In one incident, a solvent plume was discovered on an adjacent property when the foundations of a new development were sunk. The source of the pollution was identified as printing operations that had taken place on the property 20 years earlier. The original polluter could not be found, so the current owner was held liable for €300,000.
Chubb’s Robert Latimer, an underwriter specialising in environmental risks, agrees that there is a wide spectrum of risk. “Here at Chubb, we’re used to dealing with a lot of incidents, ranging from small-scale industrial units to multi-million-pound clean-ups resulting from a wide range of industry sectors,” he says. “Some clients think that if nothing has happened previously then nothing can go wrong in future, so the real question becomes: what risk management do companies have in place?
“And what happens when something goes wrong? After all, it can be a long and arduous process dealing with an incident, and then there’s the media aspect. Being investigated by the regulators and splashed over social media can leave a huge dent in your reputation, and result in significant legal costs.”
He recommends that companies ask whether their existing insurance policies cover offers enough protection in the event of a pollution incident. “Environmental impairment liability (EIL) cover has expanded significantly over the years to encompass areas that it perhaps didn’t previously, so that it’s now cost effective and is tailored to the client. So, if we look at some of the recent incidents, standalone EIL cover is fit for purpose to deal with them, unlike some of the more traditional property and liability coverages.”
Robert also suggests that companies seek insurers that can offer strong crisis response. “Environmental claims often come with a reputational impact, which companies should ensure is included in their cover,” he says.
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