Environmental claims spread to new industries: AIG

A growing range of industries reported environmental impairment liability (EIL) claims in Europe last year, according to data from AIG. In its second annual analysis of EIL claims, AIG found that sectors traditionally linked to environmental risks – such as transport, manufacturing and construction – recorded the highest number of claims. However, sectors such as finance, wholesale trade, services and public administration recorded environmental claims for the first time. AIG’s EIL claims notifications, 2017 (2016) – by type of industry Wastewater management 15% (22%) Emergency fire response 15% (7%) Fuel/petroleum management 12% (19%) Materials management 12% (5%) Waste management 11% (9%) Development, upgrade or restoration 7% (8%) Transport and conveyance 6% (9%) Asset management and maintenance 5% (3%) Other 17% (17%) Based on more than 100 claims from European clients in 2017, AIG tracked a rise in environmental incidents from wildfires and facility fires to account for 15% of all EIL loss incidents, compared with 7% in 2016. Dawn Slevin – environmental strategist, international at AIG – said climate change is one factor for these increasing claims. “It is a combination of climate change, whereby conditions are ideal for a fire to ignite and spread, coupled with forest and habitat management practices that have not adapted to a changing climate; these aspects have resulted in wildfire as an emerging risk across our EIL book of business for 2017. It’s only been in the last couple of years that companies have really been taking note of climate change and the impact this has on their business,” she said. AIG’s analysis also identified more claims from substandard management practices in handling construction and demolition waste. In 2017, 11% of AIG’s notifications were classed as waste management activities across all sectors. “While at first glance these may not appear to be the most significant area of claims in terms of volume, we know from our experience that they can be among the largest,” said Peter Jarvis, head of international environmental at AIG. Inadequate construction and demolition waste management can lead to double removal costs and third-party claims for environmental damage, as well as business interruption and criminal prosecution for illegal waste activities. “Across Europe we have an ever-increasing range of industries within our book of business,” said Mr Jarvis. He said buyers have become more educated and there is broader use of environmental insurance policies as the product matures. Wilson Hull, environmental major loss adjuster at AIG, said companies must reassess their environmental risk management and stress test their cover. “Insureds think it will never happen to them, but quite clearly – as reflected by the claims statistics over the past 12 months – it can and does. No matter how good your risk management practices are, ultimately you may have an environmental incident that you need to deal with,” he said.

Environmental claims spread to new industries: AIG

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