The Argentine environment ministry expects to meet soon with two insurance companies that will present their environmental insurance policy proposals for approval, ministry regulations director Mariana Valls told BNamericas.
"The local unit of US-based AIG and insurance company Nación Seguros are expected to present their policies by December 19," Valls said.
The government is currently trying to enforce a 2002 law requiring industries to contract environmental insurance to cover their environmental liabilities in the event of any damage.
"As long as there are two or more providers offering this type of insurance on the market, the regulation will be enforced," she added.
"While the law dates back to 2002, the legal framework was only finalized by the ministry in July this year. In August we approved a policy from insurance company Prudencia, which gave exclusive rights to other insurance distributors," Valls said.
Valls said other policies have been pre-approved by the ministry, such as the one proposed by insurance firm Sancor.
However, prior to its definitive approval by insurance regulator SSN, a lawsuit was filed against the public employee that signed the approval for alleged non-compliance with regulations.
"A lot of influences are in motion to prevent the enforcement of this regulation. The lawsuit was filed by an unknown person to avoid the approval of the Sancor policy. This may have deterred other insurers from presenting their policy proposals, but the meetings with AIG and Nación Seguros are scheduled," she said.
THE POLICY
Industries will be required to contract a financial guarantee and restitution insurance policy, Valls said.
"The policy is a guarantee held by the state, as custodian of collective environmental assets, to secure the restitution of any damages," she said.
The minimum coverage is determined by the environmental complexity of an industrial activity. The minimum annual coverage is 120,000 pesos (US$34,949) and the maximum is 50mn pesos.
"This regulation will cover mostly industrial and high-risk activities, such as oil and mining companies. A norm passed in 2007 outlines what kind of companies are required to contract the insurance, in accordance with the international uniform industrial code," Valls added.
"Companies with medium to high environmental risk should get the insurance. Each segment has its own minimum insurable amount," she said.
BENEFITS
"Argentina is the first country in the world where environmental insurance is obligatory. We hope the global recession does not affect the implementation of the system, as it is precisely in times of economic turmoil that these types of regulations must be upheld," Valls said.
"This is a financial instrument that allows for environmental costs to be internalized. Historically, these costs have been externalized, transferred to society. This way, the actual culprit of any environmental damage will have to answer with their own patrimony or that of the insurers," she added.
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