Business sector wary of planned environment insurance coverage; alternatives being sought

The business sector has expressed reservations about the draft legislative bill requiring "environmentally critical businesses" to secure environment insurance coverage, saying there are enough measures in place to cover the cost of possible ecological damage arising from business operations.

Industry stakeholders voiced this sentiment during a public-private meeting on House Bill No. 5485 entitled "An Act Requiring Mandatory Environment Insurance Coverage for Environmentally Critical Businesses" held on January 14 at the Batasang Pambansa complex in Quezon City.

Rather than mandatory environment insurance as proposed in a draft House bill, business stakeholders prefer to be given options on their preferred mode of payment for any environmental damage that may be incurred through their operations.

This is what emerged at the recent initial meeting of the technical working group (TWG) tasked to review and refine a proposed law seeking to require environmentally risky companies to take out environment insurance coverage. The discussion on H.B. No. 5485 co-authored by Reps. Rosenda Ann Ocampo and Amado S. Bagatsing was the first by the technical working group (TWG) led by Dilbert Quetulio, committee secretary of the House Committee on Ecology.

Ocampo, in a written explanatory note to the bill, said the proposed Mandatory Environment Insurance Coverage or MEIC "seeks to require owners and operators of environmentally critical businesses to secure a mandatory environmental insurance coverage for the payment of damages and environmental rehabilitation as a result of environmental impairment from its operations."

The Philippine Chamber of Commerce and Industry (PCCI) and the Philippine Exporters Confederation, Inc. (PHILEXPORT) in their January 11 draft position papers on the issue said that while mechanisms for environmental protection are necessary, it believes the MEIC is "redundant" given that the Philippine Environmental Impact Statement System, the Environmental Guarantee Fund (EGF), and similar mechanisms are already required to be created to address concerns over environmental preservation.

Both organizations noted that the Department of Environment and Natural Resources (DENR) through DENR Administrative Order 2003-03 already mandates an EGF for projects the agency determines pose "a significant public risk or where the project requires rehabilitation or restoration."

House Bill No. 5485 entitled "An Act Requiring Mandatory Environment Insurance Coverage for Environmentally Critical Businesses" wants a business firm to take out a Mandatory Environmental Insurance Coverage (MEIC) for the “payment of damages and environmental rehabilitation as a result of environmental impairment from its operation."

MEIC is thus intended to "relieve a business firm of the financial burden to spend for environmental loss or damage as a consequence of its project's construction or operations."

However, government executives and representatives from the private sector that comprise the TWG agreed that the MEIC may not be feasible because the high premium for taking out insurance would be too steep for most small and medium enterprises.

In addition, they noted the tendency for the release of claims to drag due to the long process of verification and documentation, more so if there are lawsuits involved.

This, they added, defeated the purpose of immediate clean-up and rehabilitation of the environment, payment for loss of income or property, or remuneration for medical or burial expenses after an ecological disaster. It was also brought up that making environment insurance coverage mandatory will likely drive premium costs up.

Instead, the group agreed to explore options to MEIC that can also be effectively used for the same purpose.

Dilbert Quetulio, committee secretary of the House Committee on Ecology, said the TWG will look at cash bonds, sureties, super funds, and other alternatives to mandatory insurance coverage. (PNF)