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German insurers update environmental coverage

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COLOGNE, Germany—In the wake of an industry model developed to cover exposures under a European Union directive, several German insurers have rolled out environmental polices to protect companies for liabilities under the country's environmental protection law, passed earlier this year.

"I believe it's really urgent because the risk is there, so companies should think about the insurance as well," said Jörg Sons, environmental insurance specialist at AXA Versicherung A.G. in Cologne, which launched its policy for the German market last month. The insurer is part of AXA Konzern A.G., the German unit of Paris-based AXA S.A.

Besides AXA, Hanover, Germany-based HDI Industrie Versicherungen and R+V Versicherung A.G. in Wiesbaden are among the other companies that have come out with new policies.

Germany's environmental law, or Umweltschadensgesetz, was passed in May in order to transpose the European Union's Environmental Liability Directive (2004/35/EC) into national law.

But the German buyers' association, Deutscher Versicherungs-Schutzverband e.V., points out that the new policies apparently do not go beyond an industry nonbinding insurance model developed by the Berlin-based Gesamtverband der Deutschen Versicherungswirtschaft e.V.--Germany's insurance association.

DVS previously called the cover under the GDV model "not sufficient."

The model, unveiled in April, was designed to help German insurers create insurance products to cover liabilities under the E.U. directive.

The directive created a framework for the prevention and remediation of environmental damage to natural habitats and resources. It imposed requirements on cleanup, such as restoration of biodiversity, which up to now were not covered by traditional insurance, experts have noted.

"We know that other insurers are working on their concepts and we will have to wait and see what comes out of it," said Günter Schlicht, managing director of the Bonn-based DVS, who previously noted the shortcomings in the GDV model.

"It may be a good guess, however, that for the time being German insurers are rather hesitant to go beyond the model cover in their standard wording. We can only encourage clients to discuss with their insurer (or insurers) the possibility of individual arrangements adapted to their needs," he said.

German insurers have moved more quickly than originally predicted to bring their coverage to the market. The GDV initially thought that insurers would not introduce new products until the fall, according to sources.

But insurers say there was a sense of urgency because German companies can currently be held liable for environmental damage under the new law even though it will go into effect on Nov. 14.

Germany's parliament made the liabilities under the environmental law retroactive to April 30, which was the European Union's dead- line for the transposition of its directive.