ELD in CEE: As Seen by Guy Carpenter

Hamish Dowlen, senior vice-president, Central and Eastern Europe, Guy Carpenter

What is the traditional insurance and reinsurance coverage conditions for environmental liability and property industrial risks in CEE?

In the Hungarian market, as is common in many Central and Eastern European countries, the liability coverage is combined within a general third party liability policy and therefore coverage for an event such as this recent one in Hungary would be covered under the sudden/accidental liability section. In some cases such section is sublimited, but it is unusual to have a specific policy for environmental third party liability. In general, policy limits are quite low, even for larger industrial risks. The European directives regarding environmental liability have yet to be implemented in most of CEE and, as such, such coverage is not yet a major topic in the region and insureds are not required by the regulator to purchase such cover within the liability insurance policy.

Does Guy Carpenter expect a change in pricing and conditions in the regional segment following the MAL disaster? What specific aspects of the contracts could be affected?

Despite the magnitude of the event, the insured loss is very small and Guy Carpenter does not anticipate it having a significant effect on pricing or conditions for liability insurance in the CEE region. However, it is likely that risk managers within larger industrial enterprises in the region may review their likely PML scenarios and discuss with their insurers or brokers whether higher limits of indemnity for certain types of loss scenario are necessary and available within the local market. More specifically this may focus more interest on the environmental liability from industrial insureds and the coverage that they have within their existing policies.