Environmental risks, a growing concern for businesses

Businesses have in recent years been under mounting pressure to strictly consider the impact they have on the environment and to adopt more sustainable ways of doing business. Government is also watching companies closely to ensure they abide by the National Environment Management Act (NEMA).

But businesses are not always aware of the environmental risks they face and how they can close the coverage gaps left by traditional liability and property insurance. Recently, Allianz Global Corporate & Specialty (AGCS) Head of Global Environmental Impairment Liability (EIL) Arthur Lu and Risk Consultant for Liability Casper Joubert spoke to risk managers, brokers and insurance professionals about the impact of environmental risks and how companies need to explore relevant environmental management programs as well as adequate insurance and risk transfer solutions to mitigate against potential complex financial and reputational issues.

“The EIL market in South Africa is still in its infancy, but there is a growing concern for environmental protection among businesses in the country in part due to the limited availability of fresh water sources, air pollution and soil pollution. Progress in legislative change, regulatory enforcement and increased corporate growth will undoubtedly increase the need for commercial environmental insurance,” said Dianne Kirk, AGCS Africa Head of Liability.

Companies can be held liable for environmental damage even in cases where they had not acted negligently. The damage to the environment, human and animal health as well as related legal expenses can leave a huge dent to the balance sheet of any organization. 

“Most companies should have environmental management tools such as environmental management plans in place to reduce environmental risks, but these are not adequate on their own as a reduced risk - if released – has the potential to have major financial and reputational consequences. Therefore, EIL should be seen as an instrument that enables businesses to mitigate any financial and reputational damage in case of any major environmental claim,” said Joubert.

AGCS has been offering EIL across the globe for more than two decades in response to the environmental risk caused by businesses, either due to their ongoing operations or as part of their historical activities. The company provides solutions for fixed site operations and contractor’s pollution liability to the manufacturing, construction, energy, and real estate sectors with limits of up to EUR50 million.

Delphine Maïdou, CEO AGCS Africa, added, “As a leading corporate & industrial insurer, we are truly excited to offer localized EIL to a growing African market. We firmly believe that the timing is ripe to make more businesses aware of specialized solutions such as these to help reduce coverage gaps left in place by traditional insurance programs to further protect our clients’ balance sheets."

Allianz Global Corporate & Specialty (AGCS) is the Allianz Group's dedicated carrier for corporate and specialty insurance business. AGCS provides insurance and risk consultancy across the whole spectrum of specialty, alternative risk transfer and corporate business: Marine, Aviation (incl. Space), Energy, Engineering, Entertainment, Financial Lines (incl. D&O), Liability, Mid-Corporate and Property insurance (incl. International Insurance Programs).

Worldwide, AGCS operates with its own teams in 34 countries and through the Allianz Group network and partners in over 210 countries and territories, employing almost 4,700 people of 70 nationalities. AGCS provides insurance solutions to more than three quarters of the Fortune Global 500 companies, writing a total of €7.4 billion gross premium worldwide in 2017.

AGCS SE is rated AA by Standard & Poor’s and A+ by A.M. Best.

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