With environmental liability now more commonly shared by companies as well as their directors and officers (D&O), it is perhaps high time to ponder on the direction in which environmental insurance is heading.
“Judging by recent trends, this will be an ever-evolving area of increasing liability, so it is vital that D&O work with their brokers to ensure they have cover which gives them the maximum protection for potential individual risks and liabilities,” said
Chubb D&O product specialist Daisy Deanus, as quoted in a feature on
Financier Worldwide Magazine.
Deanus continued: “D&O insurers have been aware of the increasing risks in this area and we have seen policies expand to include defence costs for environmental prosecutions against D&O to ensure they are adequately protected when they need it most. However, D&O policies will still contain a clean-up costs exclusion for the actual pollution as this risk should be insured elsewhere.”
The feature stressed the rapidly expanding scope of liabilities involving D&O when it comes to environmental damage. Citing recent cases, it highlighted not only the vulnerabilities of senior management but also the gaps in coverage.
“Holding D&O to account in their personal capacities for corporate environmental transgressions is an increasingly prevalent enforcement tool and a strong deterrent to delinquency, regardless of the scale of a company’s operations,” said Clyde & Co senior associate Christopher MacRoberts, as quoted by
Financier Worldwide.
Risk management for D&O, therefore, needs to be revisited.
“Decision makers in companies would be well advised to review their insurance arrangements closely and at least annually, to ensure that adequate and appropriate liability cover is in place,” the feature quoted Clyde & Co partner Daniel Le Roux as saying.
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