(chinadaily.com.cn)
Updated: 2007-08-24 11:52

In the face of increasing pollution related accidents, the State Environmental Protection Administration of China (SEPA) and the China Insurance Regulatory Commission (CIRC) are preparing to establish a mechanism promoting environmental pollution liability insurance, The Beijing News reported.

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A research team organized by the SEPA and the CIRC has been conducting surveys among enterprises in Northeast China's Jilin Province and East China's Zhejiang Province. Most of the surveyed expressed support for the insurance program.

The environmental pollution liability insurance is to cover third party liabilities arising from accidents at a particular insured site.

A report with results from the surveyed companies in the petrochemical, hazardous wastes processing, and hazardous goods transport industries is now complete. Local environmental bureaus across the country have been instructed to keep a copy of the report for future reference.

Despite the endorsement of the new insurance program, China National Petroleum Corporation and Sinopec consider it necessary to include petrochemical accident coverage in the program, citing the two companies' strong financial ability in dealing with such cases. Yet the introduction of insurance may complicate the current system, they said.

Some enterprises suggested once accidents occur, companies should cover the cost in coping with the accidents and compensating the third party.

In the report, insurance firms pushed for a comprehensive law regulating the industry. Insurance firms surveyed are willing to cover direct losses such as expense on cleaning up polluted sites, but refuse to pay for indirect expenses like restoring the original ecological environment.

The research team suggested piloting the new insurance program in areas where accidents are likely, including locations where hazardous products are produced, transported, and stored. Suggested places include areas around the Taihu Lake, Huaihe River, Yellow River, Songhuajiang River, and downstream Yangtze River.