Environmental risks make your business vulnerable, insurer says
Kapiti has seen an increase in the number of pollution and contamination incidents in recent years, as has the rest of the country, and this means businesses are becoming increasingly vulnerable to the potentially high financial cost of such events, a leading insurance expert says.
Delta Insurance general manager Craig Kirk says various combinations of traditional liability policies, albeit each coming with their own exclusions, only serve to paper over environmental liability cracks.
Taking a proactive risk management approach is paramount for businesses, he says.
"Companies must be aware of the environmental risks associated with their business. They should have a robust response plan in case they fall victim to a pollution incident. They need an assessment of the likely financial impact on their business of any environmental incident.
"Unfortunately, even despite the most robust risk management system it is impossible to entirely remove inherent risks from a business operation.
"The consequences of a pollution event can be catastrophic for the environment but also financially for the polluter. It is here that the understanding and incorporation of comprehensive environmental liability and pollution insurance can protect businesses in the wake of a pollution incident.
"We believe that protection of our environment is a social obligation for all Kiwis and organisations, a sentiment increasingly echoed by public and government opinion.
"Demand for more developed and customised environmental and pollution liability solutions will continue to increase substantially over the next few years."
As demonstrated by the recent water contamination crisis in Havelock North, widespread pollution can have an enormous impact on a community, from individual health to financial loss due to business closure, decreased tourism, decreased manufacturing output and other knock-on effects.
Policymakers are actively legislating to address pollution issues as evidenced by the enactment of the Environmental Reporting Act 2015. Litigation is increasing whereby there has been an upward trend in legal action in the Environmental Court, with the number of filed appeals increasing by 24 percent over the past year, Mr Kirk says.
"Stricter enforcement of the Resource Management Act 1991 and penalties imposed on guilty parties have in some cases amounted to hundreds of thousands of dollars. Clean-up costs for serious pollution events can run into millions of dollars.
"This changing landscape has increased demand for specialist environmental insurance policies that provide an all-encompassing 'environmental shield' with coverage for all pollution events that may affect a business. Yet the industry has been slow to meet this demand.
"Like many emerging risks it is important to be ahead of the curve rather than react when it's too late. The environment is central to our perception of New Zealand and we trade on our 100 percent pure image.
"We believe that through collectively cleaning up our act in New Zealand today we will help create a safer and more sustainable world for our children to inherit tomorrow," Mr Kirk says.
Delta Insurance is the only Kiwi owned and operated specialist liability underwriting agency in New Zealand.
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