Environmental liabilities can be imposed on Directors and Officers of a company and in certain circumstances may even transfer to lenders and financial institutions involved in funding an organizations’ activities advises Marsh, the world’s leading insurance broker and risk advisor.
Industrial pollution has been a key cause of concern and the Indian Government and Regulators are following a robust regulatory framework to avoid any further damage. Existing laws and recent ‘Green Bench’ initiatives of the apex court in India and similar initiatives at the state level have set the trend of speedy action against those who damage the environment.
Speaking at the conference on ‘Emerging Environmental Risks’, Mr. Sanjay Kedia Country Head and CEO, Marsh India said “There is an increasing acknowledgement and expectation, from all – government, regulators, the general public and special interest groups, that business must take an active role in protecting the environment from damage and deleterious change”.
“Companies will now need to provide for potential environmental risks and associated liabilities, through a process of risk quantification to ensure that any environmental damage can be effectively rectified and that the liabilities do not have a direct effect on the balance sheet.” he added.
Some of the types of environmental risks faced by companies are third party property damage, bodily injury to general public, clean up costs incurred for remediation of the damaged ecology and damage to biodiversity.
Marsh brought to light specific industries such as chemical, pharmaceutical, auto, infrastructure and hospitality which are at high risk. While Environmental Impact Assessment clearances for green field and expansion projects and NOCs for operating commissioned plants enable industrial activity, risk exposures from carrying out such activities need to be insured. Pollution Legal Liability and Contractors Pollution Legal Liability are the covers available to mitigate risks.
Marsh’s global experts highlighted the international regulations and the impact on Indian businesses. As more and more Indian companies look for acquisitions and set up international presence, they will not only have to comply with regulations locally but also internationally, and sometimes in very developed, litigious and highly regulated jurisdictions. In a number of countries financial security provisions are obligatory for certain types of businesses and companies are increasingly looking towards insurance to provide the financial security required.
As the regulatory and legislative action on the ‘Green’ initiatives catch up, it is imperative that India Inc. is prepared to manage these risks well. Companies need to be aware of these risk exposures not only to protect the environment but also protect their balance sheets from long tail environmental liability cases.
About Marsh India
Marsh India Insurance Brokers Pvt. Ltd. is an affiliate of Marsh Inc., the world's leading insurance broker and risk adviser. Marsh has over 23,000 employees and provides advice and transactional capabilities to clients in over 100 countries. Marsh is a unit of Marsh & McLennan Companies (MMC), a global professional services firm with approximately 52,000 employees and annual revenue of $11 billion. MMC also is the parent company of Guy Carpenter, the risk and reinsurance specialist; Kroll, the risk consulting firm; Mercer, the provider of HR and related financial advice and services; and Oliver Wyman, the management consultancy. MMC’s stock (ticker symbol: MMC) is listed on the New York, Chicago and London stock exchanges.
Marsh India is among the first foreign brokers to obtain a composite insurance broking license undertaking both direct insurance and reinsurance broking businesses in India with a focus to provide end to end risk and insurance solutions starting from risk identification and assessment, to claims handling. Marsh India services companies across various sectors including IT ITeS, Pharma and BFSI to name a few.
Marsh India launched its operation in the year 2003 and has established a full service team comprising insurance professionals replete with relevant industry expertise and hands-on experience.
