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BIZCHINA / Center
Regulators plan environmental liability insurance
(chinadaily.com.cn)
Updated: 2007-08-24 11:52
In the face of increasing pollution related accidents, the State
Environmental Protection Administration of China (SEPA) and the China
Insurance Regulatory Commission (CIRC) are preparing to establish a
mechanism promoting environmental pollution liability insurance, The
Beijing News reported.
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A research team organized by the SEPA and the CIRC has been conducting
surveys among enterprises in Northeast China's Jilin Province and East
China's Zhejiang Province. Most of the surveyed expressed support for the
insurance program.
The environmental pollution liability insurance is to cover third party
liabilities arising from accidents at a particular insured site.
A report with results from the surveyed companies in the petrochemical,
hazardous wastes processing, and hazardous goods transport industries is
now complete. Local environmental bureaus across the country have been
instructed to keep a copy of the report for future reference.
Despite the endorsement of the new insurance program, China National
Petroleum Corporation and Sinopec consider it necessary to include
petrochemical accident coverage in the program, citing the two companies'
strong financial ability in dealing with such cases. Yet the introduction
of insurance may complicate the current system, they said.
Some enterprises suggested once accidents occur, companies should cover
the cost in coping with the accidents and compensating the third party.
In the report, insurance firms pushed for a comprehensive law regulating
the industry. Insurance firms surveyed are willing to cover direct losses
such as expense on cleaning up polluted sites, but refuse to pay for
indirect expenses like restoring the original ecological environment.
The research team suggested piloting the new insurance program in areas
where accidents are likely, including locations where hazardous products
are produced, transported, and stored. Suggested places include areas
around the Taihu Lake, Huaihe River, Yellow River, Songhuajiang River,
and downstream Yangtze River.
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