The environmental insurance market in London and Europe showed signs of growth in 2006 as insurers say placements increased 100 percent over 2005, according to an insurance brokerage report.
The Willis Environmental Index, released by London-headquartered insurance brokerage firm Willis Group Holdings, said total premium placed in the London and European environmental insurance market is estimated to be in the region of ?60 million ($118 million U.S.), up from approximately ?40 million ($79 million) in 2005.
Environmental insurance involves a variety of coverages for pollution and environmental impairment liability and cleanup.
The Willis Environmental Index, a quarterly survey of non-U.S. environmental insurers, asked participants for their views on the underwriting market conditions.
According to the report, annual premium placed into "Pollution Pool" insurance programs available in countries such as France, Italy, Spain and The Netherlands comprises approximately EUR70 million ($93 million), while premium spent on environmental coverage available through the German general liability market has been estimated to account for approximately EUR250 million ($333 million).
The increase in premium spent has been tempered by the continuing soft market as well as an increase in the number of policies placed for operational risk exposures, said Willis.
Operational risk exposures tend to be written for shorter policy periods (and thus attract lower premium levels) than long-term policies covering historic contamination risks, according to the brokerage.
The London and European environmental insurance market is now more competitive than at any other time, Willis continued, providing the opportunity for broader coverage for reduced premium levels compared to recent years.
Individual insurers are able to offer a capacity of up to approximately ?25 million ($49 million), with higher limits available through the use of excess layers, the brokerage added. Such an approach is seldom required as the vast majority of policies proceed with a limit of ?10 million ($20 million) or less take-up, as reported in Willis Autumn 2006 Index.
The complete text is available at www.willis.com/Extras/Publications.aspx.
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