Current Demand for the Insurability of Liability for Damage to the Natural Environment
| Authors | |
|---|---|
| Year of publication | 2009 |
| Type | Article in Periodical |
| Magazine / Source | Zemědělská ekonomika |
| Citation | |
| Web | http://agriculturejournals.cz/web/agricecon.htm |
| Field | Management and administrative |
| Keywords | environmental insurance, commercial insurance company, insurance market |
| Description | Since 2004, the basic document which has governed liability for damage to the natural environment in the European Union is the Environmental Liability Directive No. 2004/35/EC, as amended by subsequent regulation No. 2006/21/EC. The main purpose of the legislation was to ensure that the entity responsible for the damage pays all costs for rectifying its consequences. If it concerns damage to the natural environment, the operator must undertake measures for rehabilitation, replacement and regeneration of damaged natural resources. Primary replacement, which returns damaged natural resources to their original state, may be differentiated from complementary replacement as compensation in the case in which primary replacement has not provided adequate reparation, and finally compensatory replacement -- compensation for temporary loss of natural conditions. This paper aims at an analysis of the possible means for eliminating risks due to liability for environmental damage caused by the actions of an operator whose activities potentially threaten the natural environment and may cause biodiversity damage. Risks are assessed with regard to risk insurability criteria for potential damage to the natural environment. The importance of risk management is stressed in the sophisticated form known as Enterprise Risk Management. Risk management is becoming increasingly important as part of the Solvency II concept, currently in preparation, whose first and second pillars accent risk management in financial institutions and consistent quantification of obvious, hidden and potential risks. This paper is focused on an analysis of specific presumptions about the insurability of risk as concerns environmental insurance. The paper was written as part of research project MSM 6215648904, carried out by the Faculty of Business and Economics, under the name "The Czech Republic in the processes of integration and globalization, and the development of the agriculture and service sector in the new conditions of the integrated European market", following the goals and methodology of the research project. |