August 15, 2023
In today’s world, businesses are increasingly concerned about their environmental impact due to regulations and growing attention to climate change and other environmental, social, and governance (ESG) issues. To address potential environmental liabilities, many companies have turned to the environmental insurance market. In this article, we explore the current state of the environmental insurance market and its relevance to Africa.
The Evolution of the Environmental Insurance Market:
Over the past four decades, the environmental insurance market has undergone significant growth and transformation. Initially, the market emerged as a response to fill the gap left by pollution exclusions in general liability policies. These policies were not designed to cover liabilities related to issues such as asbestos which has been an issue in Africa, particularly due to its widespread use in various industries – including construction, shipbuilding, automotive, and mining – in the past. Over time, the health risks associated with asbestos exposure became evident as the inhalation of asbestos fibers can lead to serious and often fatal health conditions. As awareness of the health risks grew, regulations and restrictions on the use of asbestos were implemented in many countries to phase out and ban the use of asbestos in Africa. However, the legacy of past asbestos use still poses challenges, as there are existing buildings and infrastructure that contain asbestos-containing materials (ACMs). As the market matured, coverage expanded, and the number of carriers offering environmental insurance increased exponentially.