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Environmental Pollution Liability Insurance in China: In Need of Strong Government Backing

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Abstract

Environmental pollution liability insurance was officially introduced in China only in 2006, as part of new market-based approaches for managing environmental risks. By 2012, trial applications of pollution insurance had been launched in 14 provinces and cities. More than ten insurance companies have entered the pollution insurance market with their own products and contracts. Companies in environmentally sensitive sectors and high-risk industries bought pollution insurance, and a few successful compensation cases have been reported. Still, pollution insurance faces a number of challenges in China. The absence of a national law weakens the legal basis of pollution insurance, and poor technical support stagnates further implementation. Moreover, current pollution insurance products have limited risk coverage, high premium rates, and low loss ratios, which make them fairly unattractive to polluters. Meanwhile, low awareness of environmental and social liabilities leads to limited demand for pollution insurance products by industrial companies. Hence, the pollution insurance market is not yet flourishing in China. To improve this situation, this economic instrument needs stronger backing by the Chinese state.

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Notes

  1. Loss ratio: in insurance, the loss ratio is the ratio of total losses incurred (paid and reserved) in claims, plus adjustment expenses, divided by the total earned premiums.

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Acknowledgments

This work was supported by the Netherlands Royal Academy of Arts and Sciences and the Chinese Academy of Sciences (Project No. 10CDP030).

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Authors and Affiliations

  1. State Key Laboratory of Urban and Regional Ecology, Research Center for Eco-Environmental Sciences, Chinese Academy of Science, Beijing, 100085, China

    Yan Feng, Yonglong Lu & Guizhen He

  2. Environmental Policy Group, Department of Social Sciences, Wageningen University, Hollandseweg 1, 6706 KN, Wageningen, The Netherlands

    Yan Feng, Arthur P. J. Mol & C. S. A. van Koppen

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  1. Yan Feng
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  2. Arthur P. J. Mol
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Correspondence to Yonglong Lu.

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Feng, Y., Mol, A.P.J., Lu, Y. et al. Environmental Pollution Liability Insurance in China: In Need of Strong Government Backing. AMBIO 43, 687–702 (2014). https://doi.org/10.1007/s13280-013-0436-0

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