Mandating environmental liability insurance

Benjamin J. Richardson*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

21 Citations (Scopus)


In a range of jurisdictions insurers have become increasingly concerned about pollution liability risks. Insurance markets in theory can enable effective allocation of environmental damage costs and provide incentives to deter environmentally irresponsible behavior. Some commentators also believe that the contribution of insurance to these policy goals can be enhanced when environmental liability insurance is compelled by the state. Indeed, in practice, to strengthen their protection against liability claims, banks have increasingly demanded liability insurance as a condition of financing, creating in effect a mandatory insurance situation for borrowers engaged in environmentally problematic activities. Banks are also increasingly diversifying their business into insurance services, further stimulating this trend. This Article evaluates the role of insurance markets in managing environmental risks, and focuses on the question of whether environmental liability insurance should be compulsory. A wide range of environmental problems are addressed by insurance markets, including industrial accidents, contaminated land problems, climate change-induced damage and other natural disasters. Focusing on industrial pollution liabilities, the Article aims to show how insurance can facilitate environmental care and compensation, and some advantages that may accrue from mandating insurance in relation to certain environmental risks.

Original languageEnglish
Pages (from-to)293-329
Number of pages37
JournalDuke Environmental Law and Policy Forum
Issue number2
Publication statusPublished - Mar 2002
Externally publishedYes


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